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RURAL DECENTRALIZATION AND PARTICIPATORY
PLANNING FOR POVERTY REDUCTION
CHHATTISGARH STATE REPORT
Manish Gupta
December 2007
National Institute of Public Finance and Policy
New Delhi
PREFACE
Under the terms of UNDP project No. IND/03/020 titled “Rural Decentralization and
Participatory Planning for Poverty Reduction”, executed through the Planning Commission over
the period 1 March, 2004 to 31 December, 2007, a study was assigned to NIPFP in January 2006.
Under the terms of reference, enclosed as annex 1 in the overall report, NIPFP undertakes to
present one overall report and four state reports covering the states Chhattisgarh, Madhya
Pradesh, Orissa and Rajasthan.
The inception report was presented before the members of the Steering Committee on 17
April 2006. The minutes of that meeting confirmed the list of deliverables due.
The study team was led by Professor Indira Rajaraman. The members of the team were:
Dr. C. Bhujanga Rao, Dr. Manish Gupta, Dr. O.P. Bohra and Dr. Pratap Ranjan Jena.
The team worked as a whole on the entire project. Individual responsibility was assigned
as follows:
Overall Report of Four States Prof. Indira Rajaraman
Chhattisgarh Dr. Manish Gupta
Madhya Pradesh Dr. C. Bhujanga Rao
Orissa Dr. Pratap Ranjan Jena
Rajasthan Dr. O.P. Bohra.
A presentation of findings at UNDP premises was held on 11 December 2006, organised
by Mr. Pradeep Sharma, Assistant Resident Representative of the UNDP.
Subsequently the findings for each state were presented formally in the state capitals of these
four states on the dates indicated below, by a two-member team in each case. Senior state government
officials from the relevant departments attended these presentations.
Bhubaneswar 10 April 2007
Jaipur 18 May 2007
Raipur 25 May 2007
Bhopal 29 May 2007
Suggestions made by officials and non-governmental organisations attending at all these
presentations have been incorporated in the final report.
The appendix to this preface lists those in Chhattisgarh who helped with discussions,
suggestions, and the fieldwork. They are warmly thanked.
The members of the Governing Body of the National Institute of Public Finance and
Policy are in no way responsible for the opinions expressed in these reports.
December 2007 M.Govinda Rao
New Delhi Director
Appendix
Mr. P.P.Soti, Director, Panchayati Raj and Rural Development Department, Raipur, Chhattisgarh
Mr. P.C. Mishra, Special Secretary, Panchayati Raj & Gram Vikas, Government of Chhattisgarh,
Secretariat, Raipur
Mr. R.P. Mandal, Secretary, Rural Development, Government of Chhattisgarh, Secretariat, Raipur
Dr. Hanumant Yadav, Secretary, Chhattisgarh Finance Commission, Raipur
Mr. Virendra Pande, Chariman, Chhattisgarh Finance Commission, Raipur
Mr. Rajesh Kallaje, CEO, Zilla Panchayat, Raipur
Mr. Anil Rai, Project Director, World Bank Poverty Reduction Project, Raipur
Ms. Ritu Sain, CEO, Zilla Panchayat, Bastar
Mr. B.P.Ratre, Add. CEO, Zilla Panchayat, Bastar
Mr. Kurrey, CEO, Janpad Panchayat, Jagdalpor, Bastar
Mr. Manish Kumar Singh, APO, Zilla Panchayat, Bastar
Mr. Sachidanand Alok, Additional CEO, Zilla Panchayat, Zilla Rajnandgaon
RURAL DECENTRALISATION AND PARTICIPATORY PLANNING
FOR POVERTY REDUCTION
Outline of Chhattisgarh State Report
Preface
1. Introductory 1 1.1 Objectives and methodology 1
1.2 Formal status of decentralisation to PRIs in Chhattisgarh 6
2. Sample Selection for the Field Survey 8
2.1 The final sampling unit 8
2.2 Selection of districts 9
2.3 Sample selection within selected districts 12
2.4 Defining poverty 14
2.4.1 Poverty estimates by Planning Commission 15
2.4.2 Identification of BPL households 17
2.4.3 BPL survey in Chhattisgarh 20
3. Status of State Finance Commission Recommendations 22
3.1 Share of state revenue and other grants 22
3.1.1 Tax sharing 22
3.1.2 Distribution criteria 23
3.1.3 Devolution of grants 24
3.2 Own revenue 26
3.3 Data, Auditing, Monitoring 26
3.4 Functional devolution 28
4. Own Revenue and State Flows 29
4.1 Own revenues of the PRIs and state transfers - 2002-03 29
4.2 Own revenue in backward and comparator districts:
Survey results - 2005-06 31
4.3 State transfers in backward and comparator districts:
Survey results - 2005-06 40
4.4 Conclusions 44
5. Assessment of Intergovernmental Transfers from the Centre 46
5.1 Central flow to PRIS 2006-07 (All States) 46
5.2 Major central scheme flows to PRIs: Chhattisgarh 47
5.3 Analysis of survey results 50
5.4 Conclusions 53
6. Fiscal Monitoring 55
6.1 Auditing of funds at the three tiers 55
6.2 Utilisation of central funds: Backward and Comparator district 57
6.2.1 Utilisation of SGRY funds with gram panchayat/state
government appointed record keeper 58
6.2.2 Nature of utilisation of SGRY funds by gender of sarpanch 59
6.2.3 Utilisation of Central Finance Commission funds 60
6.3 Utilisation of state funds: Backward and Comparator district 61
6.3.1 Utilisation of state scheme funds 61
6.4 Utilisation of NREGS funds in 2006-007 62
6.4.1 NREGS in the state of Chhattisgarh 62
6.4.2 Progress of utilization 62
6.5 Conclusions 64
7. Conclusions 67
7.1 The formal status of rural decentralization 67
7.2 Summary of flows to PRIs from Centre, States and own revenues 68
7.3 Fund flows from the Centre 69
7.4 Fund flows from the State government 70
7.5 Own revenues 71
7.6 Monitoring and utilization 72
Annexes 75
List of Tables
1.1 Summary of contents in overall and state reports 4
1.2 Panchayati Raj Institutions at the three tiers 6
1.3 Elections to Panchayati Raj Institutions 6
1.4 State Finance Commissions: PRI shares in state revenues 7
2.1 List of indicators used for district selection 10
2.2 Test for Ranks 11
2.3 Selected districts in Chhattisgarh 12
2.4 Selection of blocks (i.e., Janpad panchayats) 13
2.5 Selection of Gram panchayats 13
2.6 Rural poverty ration and poverty line 17
2.7 Chhattisgarh: District wise percentage of BPL household in total rural
household, 1997 21
3.1 State Finance Commissions’ devolution (divisible pool) to PRIs 23
3.2 Criteria for inter-district distribution 24
3.3 Other recommended grants by First and Second SFC and action taken 25
3.4 Release of grants as per EFC recommendation and utilization 27
3.5 Provision and utilization of grants for maintenance of Accounts & Audit and
creation of data base 28
4.1 Own revenues of PRIs in Chhattisgarh 30
4.2 Per capita own revenues of PRIs in Chhattisgarh 30
4.3 Composition of total revenue of PRIs in 2002-03 31
4.4 Tax and non-tax powers of the PRIs – Chhattisgarh 33
4.5 Matrix of GPs by number and type of own taxes 34
4.6 Matrix of GPs by number and type of own non-tax revenues 35
4.7 Matrix of JPs by number and type of own non-tax revenues 36
4.8 Matrix of ZPs by number and type of own non-tax revenues 36
4.9 Composition of own revenue sources of GPs by district 37
4.10 Composition of own revenue sources of JPs by district 38
4.11 Composition of own revenue sources of ZPs by district 38
4.12 Mean per capita own revenue receipts of the GPs 38
4.13 Mean per capita own revenue receipts of all the tiers 39
4.14 Own tax and non-tax percent to total own revenues 39
4.15 Share of own revenues of the PRIs in total funds received 40
4.16 Matrix of GPs by number and type of state schemes 41
4.17 Matrix of JPs by number and type of state schemes 42
4.18 Matrix of ZPs by number and type of state schemes 42
4.19 Mean per capita state scheme and revenue transfers to GPs 42
4.20 Mean per capita state scheme and revenue transfers to all tiers 43
4.21 Share of state schemes and assigned revenue funds to total funds received
by the PRIs 43
5.1 Centrally sponsored schemes reaching the PRIs: 2006-07 47
5.2 Per capita budget estimates for 2006-07 (eight CSS and MPLADS) 50
5.3 Major centrally sponsored schemes in operation in the PRIs: Chhattisgarh 50
5.4 Mean funds received by PRIs per capita by district 51
5.5 Share of centrally sponsored schemes in total funds received 52
5.6 Frequency distribution of GPs by percent of SGRY to total funds received 53
6.1 Provision of utilization of grants for maintenance of accounts and audits 56
6.2 Frequency distribution of PRIs by year accounts last audited 56
6.3 Frequency distribution of ZPs and JPs by percent utilization of major CSS
funds received during the year 57
6.4 Matrix of GPs by type of record keeper and percent utilization of SGRY
funds received during the year 58
6.5 Matrix of GPs by total constituents of nature of utilization of SGRY funds
by gender of sarpanch 59
6.6 Test for differences in preferences between female and male sarpanch in
utilization of SGRY funds 60
6.7 Frequency distribution of GPs by percent utilization of Central FC funds
received during the year 61
6.8 Frequency distribution of ZPs by percent utilization of state scheme funds
received during the year 62
6.9 Coverage of NREGS districts in Chhattisgarh 62
6.10 Progress of NREGS: Funds released and expenditure on works undertaken
(as on 21.08-06) 63
7.1 Per capita flows to PRIs from Centre, state and own revenues 68
List of Charts
3.1 Pattern of release of EFC grants – Chhattisgarh 27
5.1 Per capita flows under eight CSS 48
5.2 Per capita flows of eight CSS in 2005-06 49
6.1 Utilisation pattern of fund released and expenditure incurred under NREGS 63
6.2 Percent share of fund released and expenditure incurred under NREGS 64
List of Annexes
1. Principal component analysis (PCA) 75
2. Ranking of districts 76
3. Selected ZPs, JPs, and GPs in Chhattisgarh 77
4. Rural poverty head count ratio 80
5. Indicators and scoring schemes used in 2002 BPL Census 81
6. SFC recommendations and action taken report 83
7. Functional devolution in Chhattisgarh by different departments 87
8. Fund flows to PRIs through eight CSS: Chhattisgarh and all India 107
9. Frequency distribution of ZPs, JPs, and GPs in Chhattisgarh by number
and type of central schemes received 109
Abbreviations
ATR : Action Taken Report
B : Backward
BE : Budget Estimates
BPL : Below Poverty Line
C : Comparator
C&AG : Comptroller and Auditor General
CAA : Constitutional Amendment Act
CFC : Central Finance Commission
CPIAL : Consumer Price Index for Agricultural Labourers
CPIIW : Consumer Price Index for Industrial Workers
CRSP : Central Rural Sanitation Programme
CSS : Centrally Sponsored Schemes
DDP : Desert Development Programme
DPAP : Drought Prone Areas Programme
EFC : Eleventh Finance Commission
FY : Financial Year
GOI : Government of India
GP : Gram Panchayat
GS : Gram Sabha
HCR : Head Count Ratio
HDI : Human Development Index
IAY : Indira Awaas Yojana
IWDP : Integrated Wastelands Development Programme
JP : Janpad Panchayat
MLA : Member of Legislative Assembly
MP : Madhya Pradesh
MPLADS : Member of Parliament Local Area Development Scheme
NAS : National Account Statistics
NFFWP : National Food for Work Programme
NIPFP : National Institute of Public Finance and Policy
NIRD : National Institute of Rural Development
NREGS : National Rural Employment Guarantee Scheme
NSSO : National Sample Survey Organisation
PCA : Principal Component Analysis
PCY : Per capita Income
PRI : Panchayati Raj Institutions
PUCL : People’s Union for Civil Liberties
RSVY : Rastriya Sam Vikas Yojana
SC : Scheduled Caste
SFC : State Finance Commission
SGRY : Sampoorna Grameen Rozgar Yojana
SGSY : Swarnjayanti Gram Swarozgar Yojana
SRSWR : Simple Random Sampling with Replacement
ST : Scheduled Tribe
TFC : Twelfth Finance Commission
TOR : Terms of Reference
ULBs : Urban Local Bodies
UNDP : United Nations Development Programme
ZP : Zilla Panchayat
1
RURAL DECENTRALISATION AND PARTICIPATORY
PLANNING FOR POVERTY REDUCTION
FINAL REPORT: CHHATTISGARH
1. INTRODUCTORY
1.1 OBJECTIVES AND METHODOLOGY
This study is embedded in a larger United Nations Development Programme
(UNDP) project1 with the Planning Commission of the Government of India. The
larger project is operational in character, with a largely capacity building focus, and
pilot participatory approaches focused at the village level. It is expected to converge
with other UNDP supported programmes for the capacity building of elected women
functionaries and the District Governance programme.
The study executed at the National Institute of Public Finance and Policy
(NIPFP) and reported here is part of that larger project, but has a research rather than
operational character. The geographical coverage of the larger project, and hence of
the NIPFP component as well, is confined to four states: Chhattisgarh,2 Madhya
Pradesh, Orissa and Rajasthan. Coverage is further confined to the poorer districts
within these states receiving RSVY support (Backward Area Development Fund with
effect from 2006-07). The nine pre-selected districts are: Mandla and Khargone in
Madhya Pradesh, Bastar and Rajnandgaon in Chhattisgarh, Jhalawar, Dungarpur and
Banswara in Rajasthan, and Mayurbhanj and Kandhamal in Orissa.
This set of nine district was subsequently expanded, for the purposes of the
NIPFP study alone, to include an additional set of districts from other areas of the
state with lower deprivation characteristics, so as to yield a more varied set of
findings with respect to panchayat functioning. A further set of eight districts was
added on through principal component analysis (PCA), rather than random selection,
1 No. IND/03/020
2 The state came into existence in November 2000, before which it was a constituent of Madhya
Pradesh.
2
since the intent of the expansion was purposively addressed towards including less
deprived districts. We call this new set the comparator districts. Since the selection of
district coverage within each state was, by the very terms of the project, through non-
random procedures, the results from the sample survey cannot statistically hold for the
state taken as a whole. However, the results from the cluster of backward districts will
be juxtaposed against those from the cluster of comparator districts, to provide a range
for each variable of interest. The results cannot be aggregated across the two sets of
districts to obtain state-level estimates because the mode of sample selection was
purposive, not random.
Annex 1 of the overall report lists the terms of reference (TOR) as agreed to
between UNDP and NIPFP. Five project objectives are enunciated in the TOR. They
are:
i. To quantify the present state of expenditure assignment in the four states, so
as to define the boundaries of functional responsibilities assigned to
panchayati raj institutions (PRIs), and assess this against the functional
devolution visualized in the Constitutional Amendments
ii. To assess the present state of implementation of State Finance Commission
(SFC) recommendations
iii. To assess the present state of revenue assignment
iv. To assess the present composition of revenue receipts by source (Centre/
State/Own) and thereby the present state of intergovernmental transfers
v. To assess the utilization of receipts by PRIs, and thereby the state of fiscal
monitoring in each state.
The following sources and approaches together define the methodological
approach:
a. Budgets of the respective states for financial year (FY) 2006-07 (BE)
(Budget estimates) to quantify the functional devolution in place.
b. The Central Budget, also for FY 2006-07 (BE), will be used to quantify the
share of Central flows to the rural sector actually going directly to
panchayats.
c. Data from field survey covering 780 sample gram panchayats, 78 janpad
panchayats, and 17 district panchayats in the four states. An initial set of
3
nine backward districts were pre-selected by UNDP. An additional set of
districts were required by the terms of the project, with lower deprivation
characteristics, so as to yield a more varied set of findings with respect to
panchayat functioning. Eight such were accordingly selected from a ranking
of districts in each of the four states using principal component analysis.
Within the selected districts, the sample panchayats were selected in
accordance with standard sampling procedures. Details on the sample
selection procedure are in chapter 2 of this report.
d. SFC Reports together with Action Taken Reports (ATR), and functional
devolution circulars issued by the respective states.
This report for Chhattisgarh supplements the summary of findings in the
overall report.
The field survey itself has two components:
1. There is a questionnaire on the panchayat as an institution, where the targeted
respondent was either a panchayat elected official, or the panchayat secretary.
Three questionnaires, one for each of the three tiers in the panchayat structure,
are appended to the overall report as annexes 3, 4 and 5 for the gram
panchayat (GP), janpad or block panchayat (JP), and zilla panchayat (ZP)
respectively. These questionnaires ascertain the composition of the elected
body, institutional aspects of their functioning such as frequency of meetings
and interaction with gram sabhas, the quantum and seasonal timing of fund
flows received from the Central and state schemes, performance of agency
functions with respect to these schemes from data on fund utilization,
awareness of the extent of their fiscal domain, own revenues actually raised,
and finally, willingness to raise further revenues through the contingent
valuation method. The focus in terms of detail of information collected as well
as sample size is at gram panchayat level, where executive authority is vested,
but there is a smaller sample covering panchayats at the middle and district
tiers.
2. There is a questionnaire on the main village of every sample GP, which is Part
II of the GP questionnaire (annex 3 of the overall report). The information
includes information on the degree of ethnofractionalisation, number of
4
households below the poverty line, number of kutcha and pucca structures,
type/s of water sources and distance/s to them, sanitation and solid waste
disposal status, water conservation practices, street lighting, distance to
primary and secondary education facilities, and details on the functioning of
these facilities, distance to primary health centre and the functioning of these,
and law and order.
The table below summarises the chapter structure of the overall report and the
four state reports, and maps into each the TOR objectives covered, and the
methodology used to serve that objective.
Table 1.1: Summary of Contents in Overall and State Reports
Overall
Report
Four State
Reports Objectives Methodology
Chapter 1 Chapter 1 Introductory
Chapter 2 TOR (i) a
Chapter 2 Sample selection procedure
for field survey
Chapter 3 TOR (i), (ii), (iii) d
Chapter 3 Chapter 4 TOR (iii) c,d
Chapter 4 Chapter 5 TOR (iv) b,c
Chapter 5 Chapter 6 TOR (v) c
Chapter 6 Chapter 7 Concluding
The two basic sources of intergovernmental fund flow to panchayats are the
respective state governments, and the Centre. Although the Constitutional
Amendments were enacted at the Centre, it is at the level of the state where authority
for expenditure assignment and devolution of functions to panchayats is
fundamentally vested. No devolution of functions is expected from Centre to states. A
list of 29 functions is listed in a schedule attached to the Constitutional Amendment,
defining the universe of State functions for which devolution to PRIs is suggested;
these are listed in Chatper 2 table 2.1 of the overall report.
Chapter 2 of this report for Chhattisgarh provides details on the principal
component analysis through which the set of comparator districts were selected for
the state, along with the sampling design used for the field survey. Tests for
consistency of this generated ranking with respect to two other rankings, one by per
5
capita income, and the other by the Human Development Index (HDI) show that the
PCA ranking is statistically different from those other rankings. The chapter also has a
section on the mode of identification of Below Poverty Line (BPL) households in
Chhattisgarh.
Chapter 3 sets out the present status with respect to implementation of the
recommendations of State Finance Commissions, the setting up of which at five-
yearly intervals is among the mandated requirements of the constitutional
amendments.
Chapter 4 collates such information as is available from secondary sources on
own revenues collected by PRIs for the period 1991-2003. The chapter also presents a
comparative picture of sources of own revenues and state transfers to PRIs for the
year 2002-03 from the report of the TFC, as a basis of comparison for data from the
field survey for the year 2005-06. The chapter also analyses the state transfers
comprising funds under state schemes and revenue assignments for the year 2002-03
drawn from TFC report and field survey results for the year 2005-06.
Chapter 5 covers fund flows to PRIs from the Centre, which have two
components. One component consists of flows to state governments. This includes
flows mandated by the Twelfth Finance Commission for the period 2005-10, and by
the Eleventh and Tenth Finance Commissions, for the preceding quinquennia. These
get incorporated within the consolidated fund of the states, the share of which going
directly to panchayats already stands identified in chapter 2 of the overall report. The
second component of the Central flows to rural areas bypasses state government and
is in two categories. One sub-component goes directly to the PRIs. The second sub-
component bypasses PRIs and is spent through other implementing agencies specific
to Central schemes. The sources used for this chapter will be the Budget of the Centre
for the fiscal year 2006-07, supplemented by field survey data from the recipient end,
which will pertain to the fiscal year 2005-06.
Chapter 6 will assess the utilization of receipts by PRIs, and thereby the state
of fiscal monitoring in Chhattisgarh. This chapter has necessarily to be based entirely
on the results of the field surveys.
6
Chapter 7 concludes the report.
The next sub-section of this introductory chapter provides a brief overview of
the status of PRI legislation in Chhattisgarh, and of the recommendations of the State
Finance Commissions.
1.2 FORMAL STATUS OF DECENTRALISATION TO
PRIS IN CHHATTISGARH
The state of Chhattisgarh has introduced the Chhattisgarh Panchayati Raj
(Amended) Adhiniyam, 2004, now applicable to all the three tiers of PRIs in the state.
Prior to this it adopted the Madhya Pradesh (MP) Panchayati Raj Acts of 1994 (which
was amended by MP to conform to the seventy-third Constitutional Amendment).
The number of panchayats at the village, block and district levels are as shown
in table 1.2, and the electoral history in table 1.3. The state of Chhattisgarh came into
existence in November 2000 and the first elections of the PRIs in this new state were
held in January 2005. Prior to this elections were conducted in January 2000 for the
combined state of Madhya Pradesh.
Table 1.2: Panchayati Raj Institutions at the Three Tiers
State Gram
panchayats
Janpad
panchayats
Zilla
panchatats Total
Chhattisgarh 9139 (63) 146 (9) 16 9301
Source: Office of the Chhattisgarh State Finance Commission.
Note: The figures are most recent available. Those in parentheses indicate the
number of GPs per JP, and the number of JPs per ZP.
Table 1.3: Elections to Panchayati Raj Institutions
State First elections
Chhattisgarh January 2005
Source: Government of India, 2004.
State Finance Commissions at quinquennial intervals are among the mandated
requirements. The state of Chhattisgarh has constituted its first SFC on August 2003
and the Commission has submitted its report in May 2007. Until the period its
recommendations become applicable the recommendations of first and second SFC of
7
Madhya Pradesh for the relevant years are applicable to the newly created state. The
principal task addressed by SFCs has been setting the share of PRIs in the state
revenues. A summary in respect of accepted prescriptions on the divisible pool and
PRI shares thereof in table 1.4 show little change between the first and second SFCs
of MP, applicable to Chhattisgarh as well. The SFCs of MP has also made
recommendations on a wide range of other issues which are discussed in chapter 3.
Table 1.4: State Finance Commissions: PRI Shares in State Revenues
Madhya Pradesh
(undivided)
Chhattisgarh
First SFC Constituted on 22 August 2003
Report submitted in May 2007.
Award Period (1996-2001)
Divisible pool Gross tax and non-tax
revenue
PRIs share (%) per annum 2.91 % *
Second SFC
Award period (2001-06)
Divisible pool Net own tax revenue
PRIs share (%) per annum 2.93
Source: Reports of the SFC of Madhya Pradesh.
Note: * The divisible pool excludes the cess on land revenue and additional stamp
duties, the whole of which goes as a separate grant-in-aid.
There is no standing database on panchayats, notwithstanding the allocation
by the Eleventh Finance Commission (EFC) of Rs 197.06 crore for this purpose.
Chapter 3 of the state report has attempted to assess the extent to which this provision
been has utilized. The only secondary source therefore is the Report of the Twelfth
Finance Commission, which compiled data submitted in the state memoranda to the
Commission. These data are shown in chapter 3. Finally, it goes without saying that
the pressure to devolve ever more funds to PRIs, without monitoring and auditing, is a
recipe for corruption. The monitoring purpose is sought to be achieved through caps
on expenditures that can be incurred without approval from higher levels of
government, but this robs autonomy without necessarily controlling corruption. The
EFC provided an amount Rs 98.61 crore at GP and PS level for this purpose. Once
again, the effectiveness of use of this is dealt with in chapter 3.
8
2. SAMPLE SELECTION FOR THE FIELD SURVEY
2.1 THE FINAL SAMPLING UNIT
The main focus of the study is on Panchayati Raj Institutions (PRIs), which
following the 73rd
Constitutional Amendment in 1993 are expected to carry the
burden of effective delivery of anti-poverty programmes in the rural areas of the
country, where the majority of the poor reside. In order to examine the functioning of
the decentralized government in the rural areas and the effectiveness of its service
delivery, the focus of the study is mainly on the gram panchayats where the executive
authority is vested. It is, therefore, the panchayats and not the household which forms
our final sampling unit. By excluding/ignoring the households‟ perception on the
functioning of local governments we are no doubt losing out on some important
information from the beneficiaries‟ point of view, but due to limited time and finances
the study limits itself only to the survey of panchayats as an institution which forms
our final sampling unit. Within the three tiers of panchayats the major focus is at the
functioning of the lower most tier, the gram panchayat. In addition to the gram
panchayat there is a smaller sample covering the pachayats at the middle (janpad
panchayat/panchayat samity) and district (zilla panchayat) tiers.
The instrument of survey is a questionnaire on the panchayat as an institution.
Three questionnaires, one for each of the three tiers in the panchayat structure i.e., for
the gram panchayat (GP), janpad panchayat (JP), and zilla panchayat (ZP) are
prepared. These questionnaires ascertain the composition of the elected body,
institutional aspects of their functioning such as the quantum and seasonal timing of
fund flows received from the Central and state schemes, performance of agency
functions with respect to these schemes from data on fund utilization, awareness of
the extent of their fiscal domain, and own revenues actually raised.
As the focus in terms of detail of information collected as well as sample size
is at gram panchayat level a more detailed questionnaire is prepared for the GPs. The
gram panchayat questionnaire has two components. Part I of the questionnaire deals
with the institutional aspects of the functioning of the gram panchayat such as
frequency of meetings, interaction and participation in the gram sabhas, the quantum
9
and seasonal timing of fund flows received from the Centre and the state under
different schemes, performance of agency functions with respect to these schemes
from data on fund utilization, awareness of the extent of their fiscal domain, and own
revenues actually raised. This section also collects information on the willingness of
the panchayats to address local needs by raising resources from the people. Part II of
the GP questionnaire focuses on the main village of every sample GP. Here by main
village we mean the village where the GP office is located. In this section of the
questionnaire the information sought includes information on the number of
households below the poverty line, number of kutcha and pucca structures, type/s of
water sources and distances to them, sanitation & solid waste disposal status, water
conservation practices, street lighting, distance to primary & secondary education
facilities and details on the functioning of these facilities, distance to nearest health
facility and functioning of these, and law & order situation in the village. The GP, JP
and ZP questionnaires are given in annexes 3, 4, and 5 of the overall report
respectively.
2.2 SELECTION OF DISTRICTS
The selection of districts forms an important component of the present study.
The geographical coverage of the larger project, and hence the NIPFP component as
well, is confined to the four states of Chhattisgarh, Madhya Pradesh, Orissa and
Rajasthan and within these states the coverage was further confined to the pre-
assigned nine backward districts. In Chhattisgarh the coverage of the project is
confined to the districts of Bastar and Rajnandgaon. These are the poorest districts in
the state receiving RSVY support (Backward Area Development Fund). The set (of
districts) was subsequently expanded, for the purposes of the NIPFP study alone, to
include districts from other areas of the state with lower deprivation characteristics, so
as to yield a more varied set of findings with respect to panchayat functioning. In
response to this requirement an additional district was added in Chhattisgarh. We call
this new set the comparator districts. It is important to note here that since the
selection of districts in the state was, by the very terms of the project, through non-
random procedures, the results from the sample survey cannot statistically hold for the
state taken as a whole. However, the results from the cluster of backward districts will
10
be juxtaposed against those from the cluster of comparator districts, to provide a range
for each variable of interest. The results cannot be aggregated across the two sets of
districts to obtain state level estimates because the mode of sample selection was
purposive, not random.
Table 2.1: List of Indicators Used for District Selection
Name of the
indicator
Unit of
measurement Name of the indicator Unit of measurement
Per capita income Rupees Density of population Person per sq km
Infant mortality rate Per thousand
live births Crude birth rate
Births per thousand
population per annum
Rural female sex ratio
(0-6 yrs)
Females per
1000 males
SC & ST population as
percent to total
population
Percent
Households having
electricity, water and
toilet facilities
Percent
Households without
electricity, water and
toilet facilities
Percent
Rural work force
participation rate Percent
Female work
participation rate Percent
Agricultural labour Percent Rural literacy Percent
Enrolment ratio in the
age group 5-14 yrs Percent
Rural households below
the poverty line Percent
The selection of the additional districts was based on a number of indicators.
Table 2.1 gives a list of indicators used. As the number of indicators involved is large
and diverse it would be useful to represent them in the form of some sort of index. For
this the method of Principal Components is used (annex 1 briefly sets out the
technique).1 Having derived the principal components the next step would involve
constructing an index (a weighted index) from them using the proportion of total
variations absorbed or accounted for by these principal components as weights. The
index thus derived would be a composite of all the indicators and is clearly a better
measure to rank the districts or comparatively evaluate their performances. The
districts are then ranked on the basis of this newly constructed index (the complete
ranking of the districts in Chhattisgarh is in annex 2). The selection of the comparator
districts based on ranking by Principal Component analysis yields a benchmark set
with lower deprivation characteristics although, their location with respect to the
backward districts set by per capita income (PCY) alone, or human development
index (HDI) alone, may not necessarily mark them as less deprived.
1 Using SPSS ver. 11.0.0 software.
11
The district wise ranking thus obtained is now compared with the ranking
based on per capita income to see if there exists any relation between the two. A
separate exercise is also carried out to compare PCA based district ranking with those
obtained using the human development index. The Spearman‟s rank correlation
coefficient () tests for the null hypothesis H0: ( = 0) i.e., there is no relation
between the two rankings against the alternative hypothesis H1: ( > 0) or H1: ( < 0)
i.e., there is a positive (or negative) relation between the two rankings. The results are
tabulated in table 2.2. From table 2.2 one can infer for Chhattisgarh the null
hypothesis of no correlation between our ranking and the rankings on the basis of per
capita income and human development index cannot be rejected.2
Table 2.2: Test for Ranks
Chhattisgarh @
PCA Vs PCY
rank
PCA Vs HDI
rank
Rank Correlation Coefficient -0.1265 0.4882
t-value (estimated) - -
t-value (observed) ( 01.0 ) -0.623 0.623
Degrees of freedom 14 14
Outcome
Null Hyp not
rejected
Null Hyp not
rejected
Source: Author‟s calculation
Notes: @: For Chhattisgarh small sample test has been used.
PCY: Per capita income
On the basis of principal component analysis the district of Dhamtari was
added to the existing list of pre-assigned backward districts in Chhattisgarh. In
Chhattisgarh, therefore, the selected districts are Bastar, Rajnandgaon and Dhamtari.
Table 2.3 below shows the entire set of selected districts in the state.
2 For the other three states of Madhya Pradesh, Orissa and Rajasthan also the null hypothesis of no
correlation between our ranking and the rankings on the basis of per capita income and human
development index, cannot be rejected, with a single exception. Those interested could refer to the
relevant section of the respective state reports.
12
Table 2.3: Selected Districts in Chhattisgarh
States Total
districts
Sample districts PCA ranks
Backward Comparator
Chhattisgarh 16 Rajnandgaon 11
Bastar 14
Dhamtari 5
Source: Ibid
Notes: The backward districts are the initial pre-assigned districts while the comparator
districts are the districts which were later added on using PCA rankings.
2.3 SAMPLE SELECTION WITHIN SELECTED DISTRICTS
Having selected the districts in the state the next step is to select from these
the lower tiers namely the block panchayats (i.e., the janpad panchayats) and gram
panchayats. The sample target was 50 percent of the blocks in each of the selected
districts. A total of 78 blocks were selected in the four states of Chhattisgarh, Madhya
Pradesh, Orissa and Rajasthan. While arriving at a figure for the number of gram
panchayats to be selected it was decided to select on an average 10 gram panchayats
per block. The total numbers of GPs in the selected blocks are 6301 (see annex 6 of
the overall report). Thus a total of 780 GPs are selected from 6301 GPs. This yields a
sample selection percentage of 12.38 for the GPs.
In Chhattisgarh there are 25 blocks in the selected districts in all, of which 21
are in the two backward districts, while the remaining 4 are in the comparator district.
Table 2.4 provides information on the number of blocks in the selected districts for
the state. The sample target was 50 percent of the blocks in each of the selected
districts. So out of the total of 25 blocks in the state 12 were selected, 10 from the
backward districts and 2 from the comparator district. In Chhattisgarh the proportion
of blocks to be selected from the total works out to 0.480. The number of sample
blocks in each of the selected districts in Chhattisgarh is given in table 2.4.
Once the number of blocks to be selected in each of the districts is decided,
these are then selected within the district circular systematically after arranging the
blocks in the district in ascending order by number of gram panchayats in each block.
Annex 3 gives the names of the selected blocks in the three selected districts in
Chhattisgarh.
13
Table 2.4: Selection of Blocks (i.e., Janpad Panchayats)
State Total blocks in selected districts Selected blocks Percent
Backward Comparator All Backward Comparator All (7)/(4)
(1) (2) (3) (4) (5) (6) (7) (8)
Chhattisgarh 21 4 25 10 2 12 48.00
Bastar (B) 12 - 12@ 6 - 6 50.00
Rajnandgaon (B) 9 - 9 4 - 4 44.44
Dhamtari (C) - 4 4 - 2 2 50.00
Source: Ibid
Notes: B : Backward districts and C: Comparator districts.
@: In Bastar there are 14 blocks but the two blocks of Orchcha and Narayanpur are naxal infested.
Hence we have included only 12 blocks in the analysis.
Taking 12.38 percent of the total number of GPs from the selected backward and
comparator blocks in Chhattisgarh yields the GP sample size of 201 in the state as shown
in table 2.5. Thus, in Chhattisgarh the GP sample size is 201 of which 159 are from the
backward blocks and 42 from comparator blocks.
Table 2.5: Selection of Gram Panchayats
State
Total Gram Panchayats in
selected districts Sample Gram Panchayats Percent
Backward Comparator All Backward Comparator All (7)/(4)
(1) (2) (3) (4) (5) (6) (7) (8)
Chhattisgarh 1282 336 1618 159 42 201 12.42
Source: Ibid
Having identified the number of blocks to be selected both in the backward
and comparator districts the next step is to identify the GPs in each of these blocks.
Taking the proportion of GPs to be selected to the total number of GPs in the selected
blocks and applying this proportion to each block would yield the number of GPs to
be selected in each of the selected blocks. Given the listing of GPs in each of the
block, the requisite number is then selected using the procedure of simple random
sampling with replacement (SRSWR). The names of the selected GPs in each of the
selected blocks in the three selected districts of Chhattisgarh are given in annex 3.
As the selection of the district was through non-random procedures the results
from the survey cannot statistically hold for the state taken as a whole. However, the
results from the cluster of backward districts will be juxtaposed against those from the
cluster of comparator districts, to provide a range for each variable of interest.
14
2.4 DEFINING POVERTY
The conceptual approach to measurement of poverty in India is based on the
level of personal expenditure that enables the individual to satisfy a certain minimum
consumption level. People who are unable to attain the specified level of expenditure
are considered to be poor. While estimating the incidence of poverty the procedure
followed is to first define a poverty line that separates poor from non-poor. The
poverty line is quantified by taking a monetary equivalent of the minimum required
consumption levels. The population having per capita consumption expenditure levels
below the level defined by the poverty line is counted as poor. The poverty line is
applied to the National sample Survey Organisation (NSSO) household consumer
expenditure distributions as available from different rounds to estimate the incidence
of poverty. The poverty ratio, also known as head count ratio (HCR) is estimated
separately for rural and urban areas by taking the ratio of people living below the
poverty line and the total population.
Poverty line was first defined by a Working Group set up in a seminar on
„Some Aspects of Poverty‟ in 1962. Since then the methodology for poverty
estimation in India has undergone changes. The present poverty estimation is based
on the methodology specified by the expert group constituted by the Planning
Commission in 1989.
The HCR estimated by the Planning Commission gives the number (and
proportion) of poor in the country, but does not identify them. It serves the purpose of
examining the issue of poverty reduction as plan objectives in an overall
macroeconomic context and is being used for evaluating development programmes
and allocation of funds for poverty alleviation programmes. To identify households
living below the poverty line a „Below Poverty Line‟ (BPL) census is carried out in
rural areas by the Ministry of Rural Development. The reason for conducting such a
survey that covers all the rural households is to identify poor households so as to
directly assist them through specially designed anti poverty programmes by providing
productive assets, credit, skill improvement training and employment. While poverty
estimates through HCR simply gives the number of the poor, the BPL survey
15
identifies the poor households in each village in the country so that the benefits of
various schemes could be passed over to them.
The incidence of poverty in rural areas as estimated based on NSSO household
consumer expenditure survey and BPL census based on a comprehensive household
survey is not comparable. The two independent approaches of poverty estimates
following different methodologies have resulted in two dissimilar series of poverty
data for rural areas.
2.4.1 Poverty Estimates by the Planning Commission
The methodology to estimate poverty in India has undergone changes
following the recommendations of various expert groups set up from time to time by
the Planning Commission. The first attempt in this direction was taken by a Working
Group set up in a seminar on „Some Aspects of Poverty‟ in 1962 that estimated the
poverty line at Rs.20 and Rs.25 per capita per month for rural and urban areas
respectively at 1960-61 prices based on minimum normative food basket. There were
other independent studies related to poverty line during 1970s.3 The Task Force
(1979) set up by the Planning Commission using calorific norms recommended by the
Nutritional Expert Group (1968) estimated poverty lines at Rs.49.09 per capita per
month for rural areas and Rs.56.64 per capita per month for urban areas at 1973-74
prices. The Planning Commission following the Task Force methodology had
estimated the proportion and number of poor for rural and urban areas at national and
state level using the NSSO consumption expenditure survey at an interval of five
years. The estimates are available for the years 1972-73, 1977-78, 1983-84 and 1987-
88.
The Planning Commission set up another expert group in 1989 to consider the
methodological and computational aspects of estimation of poverty, which have
outlined an alternative estimation methodology. The expert group retained the 1973-
74 poverty line estimated by the Task Force - Rs.49.09 (rural) and Rs.56.64 (urban) at
3 Dandekar and Rath (1971) estimated poverty line at Rs.15 and Rs.22.50 per capita per month in rural
and urban areas respectively at 1960-61 prices taking average calorie norm of 2250 calories per capita
per day for both rural and urban areas.
16
all India level anchored in the recommended per capita daily intake of 2400 calories
and 2100 calories for rural and urban areas respectively as base year estimates. The
base year state-specific poverty lines were derived using adjusted consumer price
indices for 1973-74 corresponding to the all India poverty line to reflect the observed
differences in the cost of living index. The state-specific poverty lines were then
moved with the state-specific price indices obtained for the latter years. The expert
group prepared poverty estimates for the years 1973-74, 1977-78, 1983, 1987-88, and
1993-94 using different rounds of NSSO consumer expenditure survey data. These
estimates were released in March 1997 and replaced the earlier released series.
Major differences in the methodology set out by the expert group from the
1979 task force are:
Discontinued the practice of adjustment of NSSO data on aggregate private
consumer expenditure, which was the practice earlier to make it compatible with
that of National Accounts Statistics (NAS) data.
Use of state specific poverty line instead of one all India poverty line.
Use of state specific cost-of-living indices for updating poverty line for rural and
urban areas separately. The expert group used consumer price index for
agricultural labourers (CPIAL) for rural households and the consumer price index
for industrial workers (CPIIW) for urban households.
The Planning Commission, subsequently, estimated the incidence of poverty
for the year 1999-00 using the methodology of the expert group. The 1999-00 poverty
estimates are based on the 55 round quinquennial sample survey on household
consumer expenditure by the NSSO. The national poverty lines in terms of per capita
per month were estimated as Rs.327.58 and Rs.454.11 for rural and urban areas
respectively in 1999-00.
The poverty ratios estimated for 2004-05 are 21.8 percent for rural areas, 21.7
percent for the urban areas and 21.8 percent for the country as a whole based on the
mixed recall period. The rural poverty ratio and rural poverty line for the four states
for the year 2004-05 are given in Table 2.6 along with the rural poverty ratio of 1999-
00, based for both on the mixed recall period (MRP; see notes to table). Comparing
17
the rural poverty ratio from 1999-00 to 2004-05 based on mixed recall period we see a
sharp decline in case of both Madhya Pradesh and Chhattisgarh.
Table 2.6: Rural Poverty Ratio and Rural Poverty Line
HCR (%)
MRP
HCR (%)
MRP
HCR (%)
URP
Rural Poverty Line
(Rs. Per cap/month)
(1999-00) (2004-05) (2004-05) (2004-05)
Madhya Pradesh 37.06 29.8 36.9 327.78
Chhattisgarh* 31.2 40.8 322.41
Rajasthan 13.74 14.3 18.7 374.57
Orissa 48.01 39.8 46.8 325.79
All India 27.09 21.8 28.3 356.30
Source: Government of India, 2007. Estimates based on the 61st round of the NSS.
Note: * Chhattisgarh until 1999-2000 was a part of Madhya Pradesh. Poverty estimates
therefore in 1999-2000 for Madhya Pradesh also hold good for Chhattisgarh.
HCR: Head Count Ratio.
MRP stands for poverty estimates using a mixed recall period, varying by type of
consumable, used exclusively in the 1999-00 survey, and alongside an alternative uniform
recall period (URP) for all consumables in the 2004-05 survey. The URP estimates for 2004-
05 are comparable only with those from the 1993-94 (and prior) surveys, which used only the
URP. Annex 4 provides details on poverty estimates from previous surveys.
2.4.2 Identification of BPL Households
The Ministry of Rural Development has been conducting BPL surveys
periodically at interval of five years typically at the beginning of the five year plan
periods. The BPL surveys were carried out in 1992, 1997 and the latest BPL relates
to the year 2002. However, due to Supreme Court‟s intervention in response to a writ
petition, there is a delay in finalization of 2002 BPL list. The 1997 BPL survey
results are still being used for various poverty alleviation programmes.
The Supreme Court gave a ruling in 2003 on a writ petition by People‟s Union
for Civil Liberties (PUCL) not to remove any person from the existing BPL list till the
Court‟s next hearing. The PUCL petition was on effective implementation of the
Central and Centrally Sponsored Schemes to prevent starvation deaths and
malnutrition in the calamity affected rural areas and other backward areas and not
excluding the existing BPL families from the new list so that they continue to avail
benefits from various schemes. In accordance to the Court‟s ruling the Government
of India has advised the state governments not to finalise the BPL list till the next
18
hearing. The BPL list requires inclusion and exclusion based on the guidelines and
criteria fixed for the census by the Government. The government has already
approached the Supreme Court for clarification on its order. Subsequently, the
Solicitor General of India has advised to complete all the spade work for the
preparation of BPL list pending the final orders from the Supreme Court. However,
no further orders have been obtained from the court as yet. On further advice from
the Solicitor General, the Ministry of Rural Development has asked the state
governments to finalise the BPL list based on 2002 census and along with the new list
provide the details of the families who were in BPL list of 1997 but are getting
excluded in the new census.
The first BPL survey was carried out in 1992 in which a simple schedule was
used to collect data on household income and using all India poverty line households
living below poverty line were identified. The survey resulted in rather uncomfortably
high estimate of rural poverty of 52.59 percent at the national level and in some states
it yielded estimates that crossed 60 to 70 percent. The Ministry of Rural Development
set up an expert group to recommend modified methodology for the next BPL survey.
The 1997 BPL survey moved to a two-stage methodology. The survey
schedule had two parts, part-A of the schedule was designed to exclude the visibly
non-poor on the basis of information on households possessing selected assets and
consumer durables. After excluding the visibly non-poor, Part B of the schedule was
employed for all other households to identify those living below the poverty line. Part
B of the schedule collected information on household expenditures (previous 30
days), sex, educational status, social group affiliation, housing, and skill training to
identify BPL households. Household having per capita consumption expenditure less
than the poverty line (Planning Commission) are categorized as BPL households. This
survey also resulted in a high rural poverty incidence of 41.05 percent as against the
Planning Commission HCR estimates of 26.10 percent in 1999-00.
Major criticisms raised against the 1997 BPL survey were (a) very rigid
exclusion criterion (possession of a single ceiling fan would leave the household out
of BPL list), (b) use of poverty line of nearest state in the case of absence of state
poverty line, and (c) adoption of uniform criteria that disregarded regional variations.
19
To improve the methodology of BPL Census for the Tenth Plan, the Ministry
of Rural Development constituted an Expert Group in 2001 comprising
administrators, academics, planners and representatives of Assam, Kerala, Orissa,
Rajasthan and Uttar Pradesh. The expert group after having deliberations with other
state governments/U.T. Administrations as well as the stakeholder Central ministries
made a number of recommendations to improve the design and content of the BPL
Census. Unlike the two previous surveys where income and expenditure approaches
were taken, a „score based ranking‟ of households indicating their quality of life was
adopted for the 2002 survey. Both social and economic indicators were included in
the process of ranking.
The BPL survey schedule of 2002 had 13 indicators that include wide range of
areas like landholding, housing, food security, water supply and sanitation, literacy
and migration (annex 5). These indicators are to be assigned with scores in a scale of
0-4 for each household and aggregated to give the relative position of the particular
household in the village. The freedom was given to the state to determine the cut off
score for identifying poor households that could be uniform or vary across districts,
blocks and villages within the state. However, the states were directed to limit the
number of persons living below poverty line to 10 percent higher than the Planning
Commission estimates of 1999-00.
Given the differences in the methodologies adopted under the NSSO survey
based poverty estimates and the BPL survey, the results would not match and the
directive to limit the BPL survey results to align with the Planning Commission
estimates raises questions. The efforts to generate incidence of poverty with multiple
dimensions through large number of indicators, it was contended, would result in
measuring the same theme in different ways (Hirway, 2003). It was also pointed out
that the actual operationalisation of BPL survey 2002 would be difficult at village
level due to village level power politics and lot of subjectivity would creep into the
information set. “The complexities of aggregating multiple facets of deprivation”
through scoring of large number of indicators into a single index may throw up
improper results (Sundaram, 2003).
20
From the above scrutiny of poverty estimation in India some specific
conclusions can be drawn. The latest available poverty estimates by the Planning
Commission continues to be that relating to the year 2004-05 that used 61st round
NSSO consumer expenditure survey. The estimates indicate a reduction in the
incidence of rural poverty from 27.1 percent in 1999-2000 to 21.8 percent in 2004-05
based on mixed recall period.
The Ministry of Rural Development has still been using a ten year old census
on BPL (1997 census) population as the basis for assisting the rural poor under
various poverty alleviation programmes. Pending the final verdict from the Supreme
Court the finalization of latest 2002 BPL list using a modified methodology remains
to be implemented.
The difference between the two approaches of estimating rural poverty has
been quite large that is attributed to adoption of two different methodologies. The
BPL household surveys in 1992 and 1997 have reported higher rural poverty as
compared to the Planning Commission figures. A fresh list of BPL households
surveyed without any subjectivity would improve the actual implementation of
poverty alleviation programmes targeting really deserving poor.
2.4.3 BPL Survey in Chhattishgarh
The state of Chhattisgarh was formed in 2000 comprising 16 districts of the
parent state of Madhya Pradesh. The latest poverty estimates for the state relate to the
year 2004-05 (refer to table 2.6 for rural poverty estimates).
The 1997-98 BPL survey carried out in districts of undivided Madhya Pradesh
are still being used in Chhattisgarh and the finalization of 2002 survey is awaited.
District wise incidence of rural poverty in terms of percentage of BPL households is
given in table 2.7. The percentage of total rural household living below the poverty
line according to 1997 survey is 44 in the state. The southern districts of Dantewada
and Bastar have highest rural poverty incidence as compared to the northern region
and mainland. Among the northern districts Sarguja, and in mainland Kabirdham and
Mahasamund have high rural poverty incidence. The percentage of rural poor in
21
terms of BPL households seems to be higher than that of the rural poverty in 1999-00
HCR for the undivided Madhya Pradesh. However, it is difficult to compare these
statistics as the methodologies adopted in both the surveys are different.
Table 2.7: Chhattishgarh: District wise Percentage of BPL
Household in Total Rural Household, 1997
Sl. No. Districts
Percentage of BPL
households
1 Dantewada 60
2 Bastar 58
3 Kabirdham 51
4 Surguja 51
5 Mahasamud 50
6 Raigarh 48
7 Korba 44
8 Bilaspur 42
9 Koriya 42
10 Janjgeer-Champa 41
11 Kanker 41
12 Rajnandgaon 41
13 Jashpur 40
14 Raipur 36
15 Durg 33
16 Dhamtari 32
Chhattishgarh 44
Source: Srivastava, D.K et al.(2004), India: Fiscal Reform for Poverty
Reduction: Paper 4 Case Study of Chhattishgarh, pp. 8.
22
3. STATUS OF STATE FINANCE COMMISSION RECOMMENDATIONS
3.1 SHARE OF STATE REVENUE AND OTHER GRANTS
3.1.1 Tax Sharing
Under the provision of article 243I and 243Y of the 73rd
and 74th
Constitutional Amendments, it is mandatory for each state to constitute the SFC
within one year from the introduction of Panchayti Raj Act and then at the expiry of
every fifth year. Since the state of Chhattisgarh was created on November 2000 as
reorganization of Madhya Pradesh its first SFC as a new state was constituted in
August 2003. It has submitted it report in May 2007. Until the recommendations of its
first SFC become applicable the recommendations of first and second SFC of Madhya
Pradesh are applicable to the local bodies in Chhattisgarh (PRIs and ULBs). The
devolution of resources as recommended by first and second SFC of Madhya Pradesh
which is also applicable for the state of Chhattisgarh is being reproduced in the
section below.
Under the constitutional provision, the vertical fiscal imbalances between the
centre and the states are corrected by way of the transfer of resources from centre to
states through the instrument of Central Finance Commission (CFC). Similarly, at the
state level, the constitutional provision (article 243I (a) (i) of 73rd
Constitutional
Amendment) provides for the distribution of the “net proceeds of the taxes, duties,
tolls and fees” between the states and the panchayats.1 In other words, there is
provision to share the revenue from both taxes and non-taxes.2 The first SFC of
Madhya Pradesh has recommended sharing of gross revenue from taxes and non-
taxes, whereas second SFC has recommended a divisible pool comprising of net own
tax revenues only. The first SFC has recommended a share of 2.91 percent (excluding
the cess on land revenue and additional stamp duties, the whole of which goes as a
1 Article 243I (a) (i) of 73
rd Constitutional Amendment indicates the principles of distribution of
proceeds between state and PRIs. 2 The Tenth Finance Commission in its report discussed about the concept of “Global sharing” of all
sharable union taxes between centre and the states. The Eleventh Finance Commission (EFC)
recommended a share of 29.5 per cent of the gross revenue from all the shareable taxes put together.
The Twelfth Finance Commission recommended 30.5 per cent of net proceeds of all shareable union
taxes
23
separate grant-in-aid) to PRIs. The second SFC, on the other hand, recommended a
share of 2.93 percent from net own tax revenue.
From table 3.1 one can observe that there is heterogeneity with respect to the
divisible pool between the first and second SFC of the state, to be shared between
state and the panchayats. Keeping in view the heterogeneity in the divisible pool it is
difficult to assess the improvement with regard to devolution of resources over the
period. In addition to tax shares, there are also grants prescribed by the SFCs.
Therefore, the only possible way by which the two divisible pools are comparable is
by looking at amounts actually transferred to panchayats as a result of SFC
recommendations. The details of devolution recommended by first and second SFC
and the criteria adopted for the distribution are presented in the tables 3.1 and 3.2.
Table 3.1: State Finance Commissions’ Devolution
(Divisible pool) to PRIs
Madhya Pradesh (undivided)
(applicable for Chhattisgarh)
First SFC
Award Period (1996-2001)
Divisible pool Gross tax and non-tax revenue
PRIs share (%) per annum 2.91 % *
Second SFC
Award period (2001-06)
Divisible pool Net own tax revenue
PRIs share (%) per annum 2.93
Source: SFC Reports of Madhya Pradesh.
Note: * The divisible pool excludes the cess on land revenue and
additional stamp duties, the whole of which goes as a separate grant-in-
aid.
3.1.2 Distribution Criteria
The criteria used by the first SFC for inter-se distribution and for further
distribution amongst the gram panchayats can be grouped into equity neutral
indicators, backwardness and poverty indicators and indicators of revenue effort. The
neutral criteria were assigned weight of around 32 percent, while for backwardness
and equity criteria the weight assigned was about 68 percent. In other words, more
importance was given to the redistributive aspect. The distribution amongst the GPs
was based on population (75 percent) and area (25 percent) criteria, both equity-
24
neutral. The major distribution criteria adopted by first and second SFC of the state
are shown in table 3.2.
Table 3.2: Criteria for Inter-District Distribution
State
Madhya Pradesh (as
applicable for
Chhattisgarh)
Criteria Weightage (%)
1. Neutral criteria 31.875
(a) Population 21.250
(b) Area 10.625
2. Equity criteria 36.250
(a) Poverty
(b) Rural SC &ST pop. 15.000
(c) No. of Agricultural labourers 10.625
(d) Inverse of average gross value of output of agriculture
per hectare
10.625
3. Indicators of backwardness 31.250
(a) No. of workers in registered factories (per lakh of
population)
10.625
(b) per capita consumption of power 10.625
(c) Literacy rate 10.625
Distribution among GPs
(a) Population 75
(b) Area 25
Source: SFC Reports of Madhya Pradesh
3.1.3 Devolution of Grants
In addition to tax devolution, the first SFC of Madhya Pradesh has also
recommended devolution of resources in the form of grants to PRIs. Amongst the
grants, the prominent ones are the general purpose grants, specific purpose grants,
incentive grants, lump sum grants and establishment grants. Most of these grants are
distributed on the basis of population.
Similarly, the second SFC has also recommended grants to panchayats. These
are: (a) general purpose grants, (b).establishment grants, and (c) specific grants. It has
also recommended devolution of net proceeds of land revenue, surcharge on stamp
duty and cess on sales tax in the form of assigned tax revenue. The transfers of grants
recommended by first and second SFC are detailed in table 3.3.
25
Table 3.3: Other Recommended Grants by First and
Second SFC and Action Taken
Other grants Recommendations Action taken
First SFC
1. Special grants
2. Incentive grants to
local bodies
3. Establishment
grant
4. Lump sum grants
1. Grants for special works done through
the three-tier Panchayati Raj institutions.
2.(a) 2.5 percent of expenditure on
delegated programmes to the Panchayats
working as agents of the state governments
b) Incentives for raising own revenue
collection.
3. For 1995-96 Rs. 67.76 crore was
recommended. From the next year it will be
based on actual estimates.
4. A lump sum amount to be paid in the
form of grant-in-aid by state government at
its discretion for furnishing the offices and
their maintenance.
1. Accepted
2. (a) Accepted for
works that are
specially assigned in
addition to their
duties.
(b) Initially it was
accepted but subse-
quently in 1997, the
state government
decided that it will be
one of the indicators
of best panchayat
award scheme.
3. Accepted
4.Not Accepted
Second SFC
1.General purpose
grants
2.Establishment
grant
3. Specific grant
4.Devolution of net
proceeds
1.General purpose grant of Rs. 50 crore for
village panchayat
2. A grant (specific grant) of Rs.28.40 to
PRIs for the payment of honorarium and
other payments to the staff working in the
3-tier PRIs, with a provision of 10%
increase in the amount of grant every year
may be given.
3. Rs.5 crore to the Zila Panchayats for
organizing training programmes for elected
representatives.
4. The Commission has also recommended
the devolution of net proceeds of land
revenue, surcharge on stamp duty and cess
on sales tax in the form of assigned tax
revenue which is in existence may be
allowed to continue.
1.Not accepted
2. Accepted at 5%
increase every year.
3. Accepted
4. Accepted.
Source: SFC Reports of Madhya Pradesh
26
3.2 OWN REVENUE
The first and second SFC of Madhya Pradesh has not made any specific
recommendation about the raising of own revenue. However, the first SFC has
discussed about the incentives for raising of own revenue. In the ATR, it was
mentioned that the own revenue will be used as one of the indicators for best
panchayat award scheme.
3.3 DATA, AUDITING, MONITORING
Under the constitutional provision, the vertical fiscal imbalance between the
centre and the states are corrected through the transfer of resources from the Centre to
the states. This is done through the instrument of Central Finance Commission (CFC).
The TOR3 of Eleventh Finance Commission (EFC) required the EFC to make
recommendations with respect to the measures needed for the augmentation of
Consolidated Fund of the states to supplement the resources of the panchayats.
Accordingly, the EFC has recommended the devolution of resources for the
maintenance of core civic services, to the panchayats through the states. The table 3.4
indicates the allocation and release of grants as per the EFC recommendations and the
matching contribution given by the state (as per the EFC guidelines, each state has to
give matching contribution).
The PRIs in the state of Chhattisgarh has shown utilization of about 85.03
percent of the total release, which was higher than the average utilization of 81
percent for all states but lower than the average of 91 percent of four states under
consideration.
The annual release of grants indicates that the panchayats in Chhattisgarh,
similar to other states, have shown no pattern of utilization. Since the release was
based on the utilization of the previous installment, hence there was no pattern
3 Paragraph 3(c) and 3(d) of the President’s Order required EFC to make recommendations on the
measures needed to augment the Consolidated Fund of the States to supplement the resources of the
panchayats.
27
observed in annual release of grants. The graphical presentation of pattern of release
of grants is shown in chart 3.1.
Table 3.4: Release of Grants as per EFC Recommendation and its Utilization
(Rs. Lakh)
Allocation
(2000-05)
PRIs - Desired utilization from state govt. PRIs - As reported by state govt.
Percent
utilized
(col. 8
as % of
col.5)
Annual
Allocation
Grant
released
so far
Desired
matching
contribution
(25%
of grants
released)
Total
(grants+
contribu
tions)
Matching
contribution
by State /
PRIs
Released
to
PRI's by
State
Utilization
of funds
by PRIs
1 2 3 4 5 6 7 8 9
21001.95 4200.39 21001.95 5250.49 26252.44 5600.00 22400.20 22321.40 85.03
Source: Finance Commission Division, Ministry of Finance, Government of India.
Chart 3.1 Pattern of Release of EFC Grants-Chhattisgarh
EFC Grants Release-Chhattisgarh
2100.00
6300.79
4200.38
2100.19
6300.59
0
1000
2000
3000
4000
5000
6000
7000
2000-01 2001-02 2002-03 2003-04 2004-05
(Rs
lak
h)
The EFC has also expressed its concern about the poor state of maintenance of
accounts and their audit at the panchayats level. It has observed that at the GP and/or
JP level, there is no exclusive staff for the maintenance of accounts. Considering this
in view, it has earmarked some amount (Rs 4000 per panchayat per annum) for the
maintenance of accounts and their audit.
Another problem faced by the EFC was the non-availability of data in general
and on finances of local bodies in particular. The complete absence of good database
28
at the local level made the task of EFC more tedious, specially, while assessing the
requirement of resources for the panchayats. Keeping in view the need of good
database at the local level, it has recommended Rs 200 crore for all the states. The
details regarding grants for the provision of maintenance of accounts and the creation
database for the state of Chhattisgarh is presented in table 3.5.
Table 3.5: Provision and Utilization of Grants for Maintenance of
Accounts & Audit and Creation of Data Base
(Rs.lakhs)
Creation of data base Maintenance of accounts & auditing Auditing
response-
bilities
entrusted to
C&AG
Allocation
2000-05
Utilization
reported
%
Utilization
Annual
allocation
by EFC
Utilization
reported
%
Utilization
1 2 3 4 5 7 8
740.60 740.60 100.00 370.83 370.83 100.00 Yes
Source: Author’s calculations.
As observed from the above table, the utilization of grants with respect to
creation of database was 100 percent. Similarly, the utilization of grants provided for
maintenance of accounts and their auditing was also found 100 percent. The auditing
responsibilities were assigned to the Comptroller and Auditor General (C&AG).
However, during the field survey, it was observed that the maintenance of database at
the GP level was not very good. Also there was no indication of computerization of
database. However, the accounts were found audited.
3.4 FUNCTIONAL DEVOLUTION
The details regarding the functional devolution as per the state government
rules and notifications are shown in annex 7.
29
4. OWN REVENUES AND STATE FLOWS
4.1 OWN REVENUES OF THE PRIS AND STATE TRANSFERS - 2002-03
Due to lack of any comprehensive national data base on panchayat finances,
reports of the National Finance Commissions serve as the only source of information. The
Eleventh Finance Commission had reported data on revenue receipts of the PRIs collected
from the respective state governments for the period 1990-91 to 1997-98, which was
further extended by the Twelfth Finance Commission up to 2002-03.
Panchayati Raj Institutions are marked by their poor internal revenue effort and
high dependence on grants-in-aid and assigned revenues and other specific grants from
both central and state governments1. The per capita own revenues of the PRIs during
1990-91 and 2002-03 drawn from TFC report given in this section and the survey results
for 2005-06 in selected districts of the State reported latter show very low level of own
revenue collection. Higher internal revenue mobilization by PRIs is essential to enable
them to function as effective institutions of self-government at local level by improving
their autonomy in the decision making and the ability to plan and implement various
schemes under functions assigned to them.
The own tax and non-tax revenues of the PRIs in Chhattisgarh from 1998-99 to
2002-03 as reported by the Twelfth Finance Commission are given in table 4.1. The share
of own revenues consisting of own tax and own non-tax revenues in total revenues has
increased from 16.02 percent in 1998-99 to 20.61 percent in 2002-03. During this period,
however, there was no change in relative share of own tax and non-taxes raised by the
PRIs. The own non-tax revenues remained the major source of own revenues accounting
for 94 percent of the own revenues.
1 Memorandum to the TFC by the Ministry of Rural Development puts the internal revenue mobilization by
the PRI at 4.17 percent of their total revenues (TFC, 2004). NIRD (2002) estimated the annual average
internal revenue receipts of the PRIs for the period 1992-93 to 1997-98 at 6.34 per cent of their total receipts
excluding central grants.
30
Table 4.1: Own Revenue of PRIs in Chhattisgarh
(Rs. Crores)
Year
Own
tax
revenue
Own
non-tax
revenue
Total
internal
revenue
Share of
tax revenue
in internal
revenue
(%)
Total
revenue
Share of
internal
to total
revenue
(%)
1998-99 3.12 50.31 53.43 5.84 333.42 16.02
1999-00 3.18 51.33 54.51 5.83 346.50 15.73
2000-01 3.23 54.17 57.40 5.63 331.90 17.29
2001-02 3.31 53.41 56.72 5.84 275.34 20.60
2002-03 3.40 54.47 57.87 5.88 280.83 20.61
Source: Report of the Twelfth Finance Commission.
Note: Total revenue consists of total internal revenue, grants-in-aid and devolution and
assignment from the state government.
The per capita total revenues of the PRIs in Chhattisgarh between 1998-99 and
2002-03 are shown in table 4.2. From the table we see that while the total revenues of the
panchayats declined from Rs.207.34 in 1998-99 to Rs.164.92 in 2002-03, their total
internal revenues comprising of own-tax and own non-tax revenues registered a marginal
rise from Rs.33.23 to Rs.33.98 during this period. The own tax revenues of the PRIs
varied between Rs.1.94 to Rs.2.00 during 1998-99 and 2002-03 and was Rs.2.00 in 2002-
03. Their per capita own non-tax revenue was Rs.31.99 in 2002-03.
Table 4.2: Per capita Own Revenues of PRIs in Chhattisgarh
(Rs.)
Year
Own tax
revenue
Own non-tax
revenue
Total internal
revenue
Total
revenue
1998-99 1.94 31.29 33.23 207.34
1999-00 1.95 31.49 33.44 212.58
2000-01 1.95 32.63 34.58 199.94
2001-02 1.97 31.79 33.76 163.89
2002-03 2.00 31.99 33.98 164.92
Source: Derived from data from the Report of the Twelfth Finance Commission
Note: Mid year projected rural population were used to derive the per capita
figures
The revenue transfers from the states to the PRIs take the form of assigned
revenues and grants-in-aid. The assigned revenues primarily comprise assignment of a
specific or a predetermined proportion of the principal state tax or the proceeds of a
surcharge or cess levied by the state government on its principal tax for the exclusive use
of the PRIs. The assigned revenues are allocated to one or more tiers of panchayats. The
SFCs recommend the percentage of state taxes to be shared with the PRIs and the criteria
31
for inter se distribution among various tiers of PRIs. Acceptance of SFC
recommendations, however, is the prerogative of state governments. The grants-in-aid
broadly cover establishment costs, honorariums of the elected members, some
construction and repairing of panchayat establishments, compensation grants in respect of
taxes/non-taxes withdrawn from PRIs, incentive grants, and grants for specific schemes.
Table 4.3: Composition of Total Revenue of PRIs in 2002-03
Total
(Rs. crores)
Per capita
(Rs.)
A Total internal revenue (i + ii) 57.87 33.98
i Own tax revenue 3.40 2.00
ii Own non-tax revenue 54.47 31.98
B State transfers (i + ii + iii) 222.95 130.92
i Assignment + devolution 14.68 8.62
ii Grants-in-aid 69.71 40.93
iii Others 138.56 81.36
Total 280.82 164.90
Sources: Report of the Twelfth Finance Commission, Government of India.
Annual Report of Ministry of Rural Development, Government of India.
The composition of revenue receipts of PRIs in Chhattisgarh in the year 2002-03,
for which the latest data is available, is given in Table 4.3. The revenues generated by the
PRIs from internal sources comprising of own tax and own non-tax revenues was Rs.57.87
crores and they have received Rs.222.95 crores as assigned revenues and grants from the
state government in 2002-03. This amount includes assigned revenue from individual tax
sources and grants for establishment costs and developmental works. The total revenue
receipts from internal sources and assigned revenues amounted to Rs.280.82 crores in the
year 2002-03. The corresponding per capita revenue receipts of the PRIs works out to
Rs.164.90 of which Rs.33.98 was mobilized internally while Rs.130.92 was the state
transfers.
4.2 OWN REVENUE IN BACKWARD AND COMPARATOR
DISTRICTS: SURVEY RESULTS - 2005-06
Though the state of Chhattisgarh was created in 2000, the Panchayat acts of the
parent state Madhya Pradesh were adopted. In the statutes, it is the Gram Panchayats
which are endowed with revenue raising tax and non-tax powers while the intermediate
32
tier – janapad panchayat has been assigned with very limited tax powers. The district tier
or the zilla panchayat however, has not been assigned with any revenue raising powers.
The tax and non-tax powers assigned to the PRIs in Chhattisgarh are shown in table 4.4.
The state statute designates some of the taxes as obligatory thus making it mandatory to
levy and leaves other taxes as optional or discretionary. The GPs are assigned with
obligatory taxes like property taxes on land and buildings, private latrines, light tax, cattle
registration and sale in market, market fees and use of land and buildings in public
markets and profession taxes. The revenue raising powers of the janapad panchayat is
limited to levying only one obligatory tax - a tax on theatrical performances and other
performances of public entertainments.
The PRIs have limited autonomy in choosing the type of taxes as the assignment of
taxing powers are enshrined in the Panchayat Acts. In case of both obligatory and optional
taxes, the tax rate and the base are decided by the state government, either in the relevant
statute, or by executive order. The statute prescribes the maximum rate at which the
panchayats can levy the tax, and in some cases a range (minimum and maximum tax rates)
within which the PRIs can fix their own tax rates. For example the Chhattisgarh Acts,
prescribe minimum and maximum rates for the tax on land and buildings, profession tax,
and entertainment tax. The building tax is specified as a specific absolute levy, slabbed
with respect to floor area.
In addition to tax sources, the PRIs are also empowered to collect non-tax revenues
in the form of fees, fines, and user charges. The panchayats are vested with public
properties like irrigation sources, ferry ghats, waste lands and communal lands, orchards,
tanks, markets and fairs. Income from these properties forms part of the non-tax revenue
of panchayats, although where these are still owned and controlled by the line departments
of the state governments the non-tax revenue accrues to the state. The properties built by
the panchayats such as sewerage, drains, public roads, and buildings are also panchayat
properties and some of these do generate non-tax revenues.
33
Table 4.4: Tax and Non-tax Powers of the PRIs – Chhattisgarh
Taxes Non-taxes G
ram
pan
chay
at
Chhattisgarh Panchayati Raj Adhiniyam
1996
Obligatory tax: 1. A property tax on the lands or buildings or
both, the capital value of which including the
value of the land is more than six thousand
rupees other than-
2. Market fees on persons exposing goods for
sale in any market or at any place or any
building or structure therein belonging to or
under the control of the GP.
3. A fee on the registration of cattle sold in any
market or in any place belonging to or under the
control of the GP.
4. A tax on private latrines payable by the
occupier or owner of the buildings to which
such latrines are attached when cleaned by GP
agency.
5. A light tax, if light arrangements have been
made by the GP.
6. A tax on person, exercising any profession or
carrying on any trade or calling within the limits
of GP area.
Optional tax: 1. A tax on the bullock-carts, bicycles,
rickshaws used for hire within the limits of
Gram Panchayat area.
2. A tax on animals used for riding, driving or
burden or on dogs or pigs payable by the owners
thereof.
3. A tax on persons carrying on the profession
of purchaser, agent, commission agent,
weighman, or a measure within the meaning of
Madhya Pradesh Krishi Upaj Mandi Adhiniyam,
1972 (No. 24 of 1973), in the area of Gram
Panchayat excluding the area of a mandi.
4. A temporary tax for special works of public
utility.
5. A tax for the construction or maintenance of
public latrines and a general scavenging tax for
removal and disposal of refuse.
6. Any other tax, which the State Legislature has
power to impose under the Constitution of India.
7. A water rate where arrangements are made by
the Gram Panchayat for regular supply of water.
1. Fees for drainage where system of
drainage has been introduced by the
Gram Panchayat.
2. A fees payable by the owners of the
vehicles other than motor vehicle, where
such vehicles other than the motor
vehicles enter the Gram Panchayat area.
3. Fees for the use of sarais,
dharmshalas, rest houses, slaughter
houses and encamping grounds.
4. Fees for bullock-cart stand and tonga
stand.
5. Fees for temporary structure or any
projection over any public place or
temporary occupation thereof.
6. Fees for grazing cattle over the
grazing grounds vested in the Gram
Panchayat.
7. Lease and auction of public properties
vested with the GPs
Janpad
pan
chay
at Obligatory tax:
A tax on theatrical performances and other
performances of public entertainments.
Fees for any license or permission
granted by the JP under the act or for use
and occupation of lands or other
properties vested in or maintained by the
JP.
Source: Chhattisgarh Panchayat Raj Adhiniyam.
34
The number and type of own taxes collected by the GPs in the pre-assigned
backward districts and the comparator districts in table 4.5 show that in backward districts,
71.70 percent of GPs do not levy any taxes. In the selected comparator districts the
percentage is less at 40.48. Around 22.64 percent of the GPs in backward districts and
35.71 percent in comparator districts, collect only one source of revenue. That leaves very
few GPs collecting more than one source of tax revenue. Among the taxes collected by the
GPs the house tax and lighting tax, animal taxes and water rates are most usually levied.
The profession tax is not levied in the selected districts, even though it is obligatory. The
miscellaneous category includes taxes on market, commercial taxes and ferry service.
More GPs from the comparator districts as compared to the backward districts seem to be
exploiting their tax powers.
Table 4.5: Matrix of GPs by Number and Type of Own Taxes
House
tax
Lighting
tax
Animal
tax
Water
tax
Other
misc.
Total no.
of GPs by
source Percent
Comparator districts
0 source 0 0 0 0 0 17 40.48
1 source 1 3 6 0 5 15 35.71
2 source 1 3 2 2 4 6 14.29
3 source 0 2 3 1 3 3 7.14
4 source 1 1 1 0 1 1 2.38
Total 3 9 12 3 13 42
(7.14) (21.43) (28.57) (7.14) (30.95)
Backward districts
0 source 0 0 0 0 0 114 71.70
1 source 1 0 22 2 11 36 22.64
2 source 3 3 5 2 3 8 5.03
3 source 1 1 0 1 0 1 0.63
4 source 0 0 0 0 0 0 0.00
Total 5 4 27 5 14 159
(3.14) (2.52) (16.98) (3.14) (8.81)
Source: Author’s calculations
Notes: 1. Figures in parenthesis refer to percent of GPs to total number of GPs.
2. Percentages in the bottom row do not add up to 100.
At the middle tier, the selected JPs in both backward and comparator districts in
Chhattisgarh do not collect any tax, though they are assigned with limited tax powers. The
ZPs in the state do not have any tax powers and the survey is indicative of this.
Table 4.6 provides information on the number and type of non-tax revenue sources
of the GPs in Chhattisgarh. The table shows that a larger percentage of GPs in the
35
comparator districts exploit various sources of non-tax revenues vis-à-vis the backward
districts. A sizable percent of GPs (35.22 percent) in the backward districts do not collect
any non-tax revenues. Both in the comparator and backward districts around 28 percent of
GPs exploit one source of non-tax revenue. However, the percentage of GPs exploiting 2
source of revenue is much higher in comparator districts at 52.63 percent as against 27.67
percent in backward districts. The cumulative total of parentage of GPs exploiting more
than 2 sources of non-tax revenue for comparator districts at 15.79 is also higher as
compared to 8.18 percent for backward districts.
Table 4.6: Matrix of GPs by Number and Type of Own Non-tax Revenues
Property
rental &
lease
income
Interest
receipt
Royalty
from
minor
minerals
Income
from
forest
products Others
Total no.
of GPs Percent
Comparator districts
0 source 0 0 0 0 0 2 3.51
1 source 15 1 0 0 0 16 28.07
2 source 14 7 0 0 9 30 52.63
3 source 8 8 0 0 8 8 14.04
4 source 1 1 1 0 1 1 1.75
Total 38 17 1 0 18 57
(66.67) (29.82) (1.75) (0.00) (31.58)
Backward districts
0 source 0 0 0 0 0 56 35.22
1 source 26 12 0 1 7 46 28.93
2 source 42 21 3 0 22 44 27.67
3 source 12 10 2 0 12 12 7.55
4 source 1 1 1 0 1 1 0.63
Total 81 44 6 1 42 159
(50.94) (27.67) (3.77) (0.63) (26.42)
Source: Ibid.
Notes: Figures in parenthesis refer to percent of GPs to total number of GPs.
Percentages in the bottom rows do not add up to 100.
The major source of non-tax revenue in both the clusters is property rental and
lease income. This includes renting out panchayat properties, auctioning of ferry ghats,
ponds, orchards, trees and leasing out properties for public use. The percentage is higher in
the comparator district with 66.67 percent of the GPs having property rental and lease
income as compared to 50.94 percent in the backward districts. A large number, 29.82
percent in the comparator and 27.67 percent in backward districts, also receive interest
receipts from bank deposits of funds received by them under various central and state
36
schemes. However, this source of income depends upon unspent funds under different
schemes remaining with the banks and is not based on any revenue effort of the GPs.
Royalty from minor minerals and income from forest products accrue to relatively fewer
GPs, depending upon the endowment of such properties. Other sources mainly include
fees on issuing various certificates and for use of shops and buildings in markets and fairs,
user fees on services provided by the GPs, sale of scrap, kanji house and fines.
Table 4.7: Matrix of JPs by Number and Type of Own Non-Taxes Revenues
Property
rental &
lease
income
Interest
received Others Total Percent
Comparator districts
0 source 0 0 0 0 0.00
1 source 0 0 0 0 0.00
2 source 1 1 0 1 50.00
3 source 1 1 1 1 50.00
Total 2 2 1 2
(100.00) (100.00) (50.00)
Backward districts 0 source 0 0 0 1 10.00
1 source 4 2 0 6 60.00
2 source 2 1 1 2 20.00
3 source 1 1 1 1 10.00
Total 7 4 2 10
(70.00) (40.00) (20.00)
Source: Ibid
Notes: Figures in parenthesis refer to percent of JPs to total number of JPs.
Percentages in the bottom row do not add up to 100.
Table 4.8: Matrix of ZPs by Number and Type of Own Non-Tax Revenues
Property
rental &
lease
income
Interest
received Others Total Percent
Comparator districts
0 source 0 0 0 1 100.00
1 source 0 0 0 0 0.00
Total 0 0 0 1
(0.00) (0.00) (0.00) (100.00)
Backward districts 0 source 0 0 0 0 0.00
1 source 1 1 0 2 100.00
Total 1 1 0 2
(50.00) (50.00) (0.00) (100.00)
Source: Ibid
Notes: Figures in parenthesis refer to percent of ZPs to total number of ZPs
Percentages in the bottom row do not add up to 100.
37
For the JPs in the surveyed districts property rental and lease income and interest
receipts on the bank deposits are the major sources of non-tax revenue as is evident from
table 4.7. The ‘other’ category shown in the tables consists of non-tax revenue sources
such as sale of scrap, audit recovery, and fees for issuing certificates. The survey results
show that the ZPs in the backward districts receive non-tax revenue from property rental
and interest receipts while those in the comparator district have no source of own non-tax
revenue (see table 4.8).
The preceding tables show the number of PRIs collecting own revenues by type of
source. Table 4.9 shows the shares in own revenue collected by gram panchayats, by
source and by district. The composition of own revenues vary across districts in the state,
but the following patterns emerge.
Table 4.9: Composition of Own Revenue Sources of GPs by District (%)
Comparator district Backward districts
Dhamtari Bastar Rajnandgaon
Taxes 38.24 21.26 20.21
Fees & fines 2.06 0.64 1.25
Rent 7.44 17.31 33.92
Lease & auction 42.70 26.42 37.50
Interest 2.82 4.71 2.89
Other sources 6.74 29.66 4.23
Total 100.00 100.00 100.00
Source: Ibid
Non-tax revenues are the dominant source of own revenues of GPs across the
districts. Among the various non-tax sources the important ones are the income from lease
and auctions of ponds, markets, and orchards, and rent from panchayat properties. Taxes
contribute 38 percent of own revenues in the comparator district of Dhamtari and 21 and
20 percent in the backward districts of Bastar and Rajnandgaon respectively.
The composition of own revenue sources of the middle and district tier panchayats
is given in tables 4.10 and 4.11 respectively. The entire own revenues of JPs constitutes of
non-taxes only. The JPs do not exploit the limited tax powers assigned to them. Among
the various non-tax sources exploited by the JPs the important ones are income from
interest receipts, lease and auction, and rent. The only source of non-tax revenue for ZPs is
38
lease and auction in Rajnandgaon and interest receipts in Bastar, the two backward
districts in the state.
Table 4.10 Composition of Own Revenue Sources of JPs by District
(%)
Comparator district Backward districts
Dhamtari Bastar Rajnandgaon
Taxes 0.00 0.00 0.00
Rent 39.23 1.47 3.50
Lease & auction 19.66 51.55 18.61
Interest 41.08 46.98 77.89
Other sources 0.03 0.00 0.00
Total 100.00 100.00 100.00
Source: Ibid
Table 4.11 Composition of Own Revenue Sources of ZPs by District
(%)
Comparator district Backward districts
Dhamtari Bastar Rajnandgaon
Taxes 0.00 0.00 0.00
Lease & auction 0.00 0.00 100.00
Interest 0.00 100.00 0.00
Total 0.00 100.00 100.00
Source: Ibid
Table 4.12 Mean Per Capita Own Revenue Receipts of the GPs
(Rs.)
Comparator districts Backward districts
Dhamtari Average Bastar Rajnandgaon Average
Own tax 4.10 4.10 0.17 1.72 0.98
Own non-tax 6.89 6.89 2.03 6.07 4.14
Own revenue 10.99 10.99 2.20 7.78 5.11
Source: Ibid
Per capita own revenues raised by the GPs in surveyed districts of Chhattisgarh for
the year 2005-06 are presented in table 4.12. From the table we see that the mean per
capita own tax revenue raised by the GPs in the comparator district of Dhamtari at Rs.4.10
is higher than that of the backward districts of Bastar and Rajnandgaon at Rs.0.17 and
Rs.1.72 respectively. As regards own non-tax revenue the mean per capita figure is also
higher in the comparator district of Dhamtari as compared to the two backward districts in
the state.
39
Table 4.13 Mean Per Capita Own Revenue Receipts of all the Tiers
(Rs.)
Comparator districts Backward districts
GP JP ZP GP JP ZP
Own tax 4.10 0.00 0.00 0.98 0.00 0.00
Own non-tax 6.89 0.52 0.00 4.14 1.48 0.20
Own revenue 10.99 0.52 0.00 5.11 1.48 0.20
Source: Ibid
The per capita own revenue raised at the three tiers averaged over comparator and
backward districts are given in table 4.13.
A comparison across the three tiers of panchayats from table 4.13 reveals that the
GPs collect more per capita own revenue as compared to the middle and district tier
panchayats. These figures represent only the districts sampled, and do not yield state-level
averages. However, the per capita own revenues figures derived from the TFC reports do
not fall in the in the range reported by the survey of the sampled districts. The share of
own tax and non-tax in total own revenues across the three tiers as given in table 4.14
shows that the GPs collect taxes to the extent of 38.24 percent in comparator district and
20.62 percent in backward district, while in case of JPs and ZPs the own revenues consists
only of non-taxes.
Table 4.14 Own Tax and Non-tax Percent to Total Own Revenues
Comparator districts Backward districts
GP JP ZP GP JP ZP
Own tax 38.24 0.00 0.00 20.62 0.00 0.00
Own non-tax 61.76 100.00 0.00 79.38 100.00 100.00
Source: Ibid
Comparing the share of own revenues - both tax and non-tax in total receipts
consisting of CSS funds, Central Finance Commission funds, State scheme funds and
funds from the State Finance Commissions of the GPs in both the comparator and
backward districts as shown in table 4.15 we see that, it is higher in the comparator
districts vis-à-vis that in the backward districts. However, at the JP and ZP level the share
of own revenue in total receipts is higher in backward districts.
40
Table 4.15 Share of Own Revenues of the PRIs in
Total Funds Received
(%)
Comparator districts Backward districts
GP JP ZP GP JP ZP
4.16 0.21 0.00 1.64 0.33 0.03
Source: Ibid
4.3 STATE TRANSFERS IN BACKWARD AND COMPARATOR
DISTRICTS: SURVEY RESULTS - 2005-06
There are certain taxes which are levied and collected by the state governments but
their net proceeds are passed on to the PRIs. These are the assigned taxes. The decision as
to which taxes, duties and tolls should be assigned to the local bodies lies with the state
legislature, although the SFCs can recommend transfer of any tax from the state list to
local bodies. The assigned revenues are allocated to one or more tiers of panchayats and
the criteria used for such allocations are population/collection/formula based. Although
Chhattisgarh has constituted in first SFC in August 2003 its report is awaited. The
assigned tax revenue to PRIs in Chhattisgarh consists of land revenue, cess on land
revenue and surcharge on stamp duty. This pattern of assignment of state taxes to PRIs in
Chhattisgarh follows the Madhya Pradesh scheme pending the report of the first SFC of
Chhattisgarh
In Chhattisgarh the state government gives grants to PRIs both from plan and non-
plan accounts. The plan transfer from the state to the PRIs consists of specific grants under
various state schemes for improvement and development of basic services and rural
infrastructure. Additionally the ZPs and JPs receive lump sum grants from the state as part
of plan transfers. On the non-plan account the PRIs in Chhattisgarh receive grants to cover
their establishment costs and for training of their elected representatives.
41
Table 4.16 Matrix of GPs by Number and Type of State Schemes
Pension
scheme
Nal jal
yojana
MLA
funds
Other
misc.
Total no.
of GPs Percent
Comparator districts
0 scheme 0 0 0 0 0 0.00
1 scheme 1 0 0 7 8 19.05
2 scheme 32 0 0 32 32 76.19
3 scheme 2 0 2 2 2 4.76
Total 35 0 2 41 42
(83.33) (0.00) (4.76) (97.62)
Backward districts
0 scheme 0 0 0 0 5 3.14
1 scheme 59 0 0 5 64 40.25
2 scheme 87 12 1 76 88 55.35
3 scheme 2 1 1 2 2 1.26
Total 148 13 2 83 159
(93.08) (8.18) (1.26) (52.20)
Source: Ibid
Notes: Figures in parenthesis refer to percent of GPs to total number of GPs
Percentages in the bottom row do not add up to 100.
The survey of selected gram panchayats in Chhattisgarh reveals that in the year
2005-06 most of the GPs leaving a small percentage – 3.14 in backward district receive
funds under state schemes (see table 4.16). Pension schemes are the major state scheme
reaching large number of GPs both in the backward and comparator districts. The ‘Nal Jal
Yojana’, the state scheme to provide piped water is another important scheme in backward
districts. There are large number miscellaneous state schemes that include schemes for
schedule casts, Aakal Rahat, Tribal Area Development programme and Mahila Ghat under
which large number of GPs receive funds. Looking at the number of schemes received by
the GPs, 19 percent in the comparator and 40 percent in backward receive at least one
scheme. However, 76 per cent GPs in comparator districts receive 2 schemes as compared
to 55 percent in backward districts.
The matrix of JPs and ZPs by number and type of state schemes is illustrated in
Tables 4.17 and 4.18 respectively. The JPs and ZPs both in the comparator and backward
districts have received funds under state schemes such as pension schemes, Nava Anjore,
and Sukhad Sahara Yojana. The other miscellaneous category given in the table includes
draught relief, maternity benefit and welfare of SC/STs.
42
Table 4.17 Matrix of JPs by Number and Type of State Schemes
Pension
scheme
Nava
anjore
Sukhad
sahara
yojana
Samgara
swachhata
abhiyan
Other
misc.
Total no.
of JPs Percent
Comparator districts
2 Schemes 1 0 1 0 0 1 50.00
3 Schemes 1 1 1 0 0 1 50.00
Total 2 1 2 0 0 2
(100.00) (50.00) (100.00) (0.00) (0.00)
Backward districts
2 Schemes 4 0 4 0 0 4 40.00
3 Schemes 6 0 6 1 5 6 60.00
Total 10 0 10 1 5 10
(100.00) (0.00) (100.00) (10.00) (50.00)
Source: Ibid
Notes: Figures in parenthesis refer to percent of JPs to total number of JPs
Percentages in the bottom row do not add up to 100.
Table 4.18 Matrix of ZPs by Number and Type of State Schemes
Pension
scheme
Nava
anjore
Sukhad
sahara
yojana
Other
misc.
Total no.
of ZPs Percent
Comparator districts
3 Schemes 1 1 1 0 1 100.00
4 Schemes 0 0 0 0 0 0.00
Total 1 1 1 0 1 100.00
(100.00) (100.00) (100.00) (0.00)
Backward districts
3 Schemes 1 0 1 1 1 50.00
4 Schemes 1 1 1 1 1 50.00
Total 2 1 2 2 2 100.00
(100.00) (50.00) (100.00) (100.00)
Source: Ibid
Notes: Figures in parenthesis refer to percent of ZPs to total number of ZPs
Percentages in the bottom row do not add up to 100.
Table 4.19 Mean Per Capita State Scheme and Revenue Transfers to GPs
(Rs.)
Comparator Districts Backward Districts
Dhamtari Average Bastar Rajnandgaon Average
State schemes 23.33 23.33 26.41 45.47 36.36
Devolutions & Grants 56.52 56.52 51.94 49.64 50.74
State funds 79.84 79.84 78.35 95.11 87.10
Source: Ibid
43
The mean per capita state transfers that include transfers under different state
schemes and devolutions and grants to the GPs is given in table 4.19. The per capita state
scheme transfers to GPs for the year 2005-06 in backward districts are higher than that of
the comparator district of Dhamtari. The per capita devolutions and grants that include
assigned taxes, transfers based on SFC recommendations and other grants are higher in
Dhamtari as compared to the two backward districts of Bastar and Rajnandgaon. The
survey reveals that on an average the overall state funds transferred under different
schemes and devolutions and grants in the state is higher in backward districts.
Table 4.20: Mean Per Capita State Scheme and Revenue
Transfers of all Tiers
(Rs.)
Comparator districts Backward districts
GP JP ZP GP JP ZP
State scheme 23.33 27.38 110.51 36.36 42.79 93.20
Devolutions & grants 56.52 23.48 0.00 50.74 6.16 25.52
State funds 79.84 50.86 110.51 87.10 48.95 118.73
Source: Ibid
Table 4.21: Share of State Schemes and Assigned Revenue
Funds to Total Funds Received by the PRIs
(%)
Comparator districts Backward districts
GP JP ZP GP JP ZP
32.25 20.77 16.71 27.10 13.37 19.19
Source: Ibid
The mean per capita state transfers across the three tiers averaged over the
comparator and backward districts clusters given in table 4.20 reveal that per capita state
scheme transfers are highest for ZPs followed by GPs and JPs. However, in the case of
devolution and grants GP receive more than that of JPs and ZPs in both the district
clusters. The share of state transfers in the total funds received by the three tiers as
illustrated in table 4.21 show that the share is higher for GPs as compared to the other two
tiers.
44
4.4 CONCLUSION
1. Revenue raising powers by the state PRI statutes are assigned mainly to GPs and to
a limited extent to JPs in Chhattisgarh. Some of the taxes assigned are designated as
obligatory where the levy is mandatory and others as optional.
2. Assignment of tax rights to GPs and designating some of them as obligatory has
not resulted in all of them levying some form of taxes. A large number, 72 percent of GPs
in backward and 40 percent GPs in comparator district do not exercise their tax rights.
Among the taxes collected by the GPs the house tax and lighting tax, animal taxes and
water rates are most usually levied. The profession tax is not levied in the selected
districts, even though it is obligatory.
3. The tax performance of the comparator district of Dhamtari in terms of both
percent of GPs exploiting their tax sources and its share in own revenues is higher than
that of the backward districts. The per capita own tax collection confirms this pattern.
4. Non-tax revenues are the dominant source of own revenues of GPs across the
districts. This source accounts for nearly 80 percent of own revenues in the backward
districts and 62 percent in the comparator district. Non-tax revenues are derived
principally from lease and auction and property rental. The mean per capita own non-tax
revenue on an average is higher in the comparator district vis-à-vis the backward districts.
5. At the JP and ZP level, the own revenues of JPs and ZPs comprise income from
non-tax sources only, the important ones being lease and auction, property rental and
interest receipts. The last source depends upon the mount of unspent funds under different
schemes remaining with the banks and is not based on any revenue effort the PRIs. The
JPs, despite having tax rights, do not exploit them.
6. The own tax performance of GPs in terms of its share in own revenues and in
terms of per capita collections in both the backward and comparator districts is higher than
that of the middle and district tiers Panchayats. These figures represent only the districts
sampled, and do not yield state-level averages. The per capita own tax revenues figures for
45
2002-03 from the TFC reports falls in the range reported by the survey of the sampled
districts. However, the per capita non-tax revenue figures from the TFC reports for
Chhattisgarh, which is at Rs.32 is higher than the survey figures which fall in the range of
Rs. 0.2 to Rs.6.89.
7. Most of the GPs in both backward and comparator districts receive funds under
state schemes, though the number of schemes varies. Pension schemes are the major state
scheme reaching large number of GPs.
8. The survey reveals that on an average the overall state funds transferred per capita
under different state schemes and devolutions and grants in the state is higher in backward
districts. While the GPs in the backward districts receive higher per capita state scheme
transfers, the per capita devolutions and grants are higher in the comparator district.
9. A comparison of the mean per capita state transfers across the three tiers of
panchayats reveal that per capita state transfers are highest for ZPs followed by GPs and
JPs. The share of state transfers in the total funds received by the three tiers show that the
share is higher for GPs as compared to the other two tiers.
46
5. ASSESSMENT OF INTERGOVERNMENTAL TRANSFERS FROM
THE CENTRE
5.1 CENTRAL FLOWS TO PRIS 2006-07 (ALL STATES)
The number of CSS directed to the rural areas as identified from the Budget
documents in 2006-07 is 165 of which 41 bypass the state budget and the remaining 124
are routed through the state budgets. The total flow of funds from the centre to rural areas
(including the TFC grants but excluding Central assistance to State Plans) amounted to
Rs. 63236 crore, around 1.62 percent of GDP.
The 41 schemes amounting to Rs. 36516 crore across all states that bypass the
state budget in 2006-07 have been classified into those that flow directly to the PRIs and
those that flow to other agencies, missions, corporations and district authorities
categorised as ‘Others’ (for details see annexes 8 and 9 of the overall report of the four
states). Of these, 10 schemes amounting to Rs 21408 crores go directly to the PRIs. They
are the Sampoorna Grameen Rozgar Yojana (SGRY), National Food for Work
Programme (NFFWP), Swarnjayanti Gram Swarozgar Yojana (SGSY), Indira Awaas
Yojana (IAY), National Rural Employment Guarantee Scheme (NREGS),1 Integrated
Wastelands Development Programme (IWDP), Drought Prone Areas Programme
(DPAP), Desert Development Programme (DDP), Central Rural Sanitation Programme
(CRSP) and Member of Parliament Local Area Development Scheme (MPLADS).2 The
remaining 31 schemes go to destinations other than PRIs. Table 5.1 lists the ten CSS
reaching the PRIs for the years 2005-06 and 2006-07.
1 Under NREGS the program officer or the district programme officer will allot at least 50 percent of the
works in terms of the costs to the gram panchayat for execution. This is the statutory minimum but the
concerned officer can allot more if deemed feasible. The intermediate and district panchayats can also be
given the responsibility of executing works from among the 50 percent that are not to be executed by the gram panchayat. Additionally line departments of the government, public sector undertakings of the central
and state governments, cooperative societies, NGOs, Self-Help-Groups can also be the implementing
agencies. Here we have assumed that the entire fund under NREGS go to PRIs. 2 MPLADS is not a designated CSS, but is similar because it is a Central provision for constituency
development expenditure by Members of Parliament. We have assumed that 75 percent of the funds under
MPLADS go to the rural areas and PRIs as they are the preferred implementing agencies.
47
Table 5.1: Centrally Sponsored Schemes Reaching the PRIs: 2006-07
(Rs. Crore)
Scheme
Bypassing state budgets
2005-06 2005-06 2006-07
BE RE BE
Sampoorna Grameen Rozgar Yojana (SGRY) 4000.00 8500.00 3000.00
National Food for Work Programme (NFFWP) 6000.00 4095.00 0.00
Swarnjayanti Gram Swarozgar Yojana (SGSY) 960.00 1000.00 1200.00
Indira Awaas Yojana (IAY) 2775.00 2750.00 2920.00
National Rural Employment Guarantee Scheme (NREGS)# 11300.00
Integrated Wastelands Development Programme (IWDP) 445.00 453.00 452.90
Drought Prone Areas Programme (DPAP) 353.00 353.00 360.00
Desert Development Programme (DDP) 268.00 268.00 270.00
Central Rural Sanitation Programme (CRSP) 630.00 630.00 720.00
Member of Parliament Local
Development Scheme (MPLADS)* 1185.00 1185.00 1185.00
Central Fund Flows Assigned to PRIs 16616.00 19234.00 21407.90
Sources: 1. Expenditure Budget: 2006-07, Vols. 1&2, Ministry of Finance, 2006, GOI.
2. Detailed Demand for Grants: 2006-07, Various Ministries, Government of India.
3. Garg, State Sector Plan Grants by Centre, (mimeo), 2006.
Notes: # We have assumed that the entire funds under NREGS go to PRIs.
* MPLADS is not a designated CSS, but is similar because it is a Central provision for
constituency development expenditure by Members of Parliament. We have assumed that 75
percent of the funds under MPLADS go to the rural areas and PRIs as they are the preferred
implementing agencies.
5.2 MAJOR CENTRAL SCHEME FLOWS TO PRIS: CHHATTISGARH
The CSS funds discussed in the earlier section capture the total amount going to
all the states. There is no formula whereby each state’s share in this total can be derived.
However, in the case of the eight CSS of the Ministry of Rural Development, a state-wise
break up is possible.3
The scheme-wise details of these eight CSS (only central transfers) for
Chhattisgarh for the years 2004-05 and 2005-06 are given in annex 8. In 2005-06 the
central releases under these schemes for Chhattisgarh accounted for 3.6 percent of the all
India central releases under these eight CSS.
3 The other two of the ten identified as directly reaching the PRIs, are MPLADS (Member of Parliament
Local Area Development Scheme), which is problematic because the ultimate recipients could well be
urban or non-PRI rural, and the Central Rural Sanitation Programme for which state-specific figure were
not available.
48
The per capita receipts from these eight schemes for the two years 2004-05 to
2005-06 and budget estimates of 2006-074 are shown in chart 5.1. The budget estimates
for 2006-07 are derived by using respective state shares of Central releases of these eight
CSS from the aggregate of 2005-06 estimates.5 In 2005-06 and 2006-07 the per capita
provision of the eight Centrally Sponsored Schemes in Chhattisgarh is higher then the all
India per capita figure.
Chart 5.1: Per Capita Flows under Eight CSS
187
269
392
165
240
142
0
50
100
150
200
250
300
350
400
450
2004-05 2005-06 2006-07
Chhattisgarh All India
The details of the individual schemes (only central transfers) are available for the
year 2005-06 (for details see annex 8). The per capita receipts for these eight schemes
and their percentages are shown in chart 5.2. In 2005-06, SGRY and NFFWP together
account for more than 78 percent of the total receipts under CSS in Chhattisgarh while in
2004-05 their share was around 71 percent.
4 Mid year projected rural population were used to fiscal year data (e.g. for 2005-06, population of 2005).
5 Budgetary allocations are not provided by destination for an ongoing fiscal year. These figures so derived
could overestimate the actual releases as schemes like NREGS are demand driven and the fund flow would
depend upon ulilisation by the state government.
49
Chart 5.2: Per Capita Flows of Eight Centrally Sponsored
Schemes in 2005-06
DPAP, Rs. 9,
(4%)IWDP, Rs. 8,
(3%)
IAY, Rs. 25,
(9%)
NREGS, Rs. 4,
(2%)
SGRY, Rs. 80,
(30%)
SGSY, Rs. 11,
(4%)
NFFWP,
Rs. 131,
(48%)
Note: Of the eight CSS that we have considered DDP is not operational in CSS
The per capita budget estimates for eight CSS and MPLADS in Chhattisgarh for
the year 2006-07 are given in table 5.2. The state specific budget estimates are derived by
multiplying respective state shares in total central releases for the year 2005-06 (all India)
with total budget estimates of 8 CSS for 2006-07. The fund flows to MPLADS are
estimated by taking the number of MPs (both Lok Sabha and Rajya Sabha) in the
respective states and assuming that 75 percent of the allocations are directed to PRIs. The
budgeted per capita fund flows so obtained for Chhattisgarh at Rs. 404.95 is higher than
the estimated all India per capita figure of Rs. 254.59.
50
Table 5.2: Per Capita Budget Estimates for 2006-07 (Eight CSS and MPLADS)
Central releases
(2005-06) 2006-07(BE)
8 CSS Share 8 CSS MPLADS
Total (9
schemes)
Per
capita
(Rs. Crore) (%) (Rs. Crore) (Rs.)
Chhattisgarh 477.56 3.61 704.91 24.00 728.91 404.95
All India 13212.74 100.00 19502.90 1185.00 20687.90 254.59
Source: Annual Report: 2005-06, Ministry of Rural Development, and Expenditure Budget:
2006-07, Ministry of Finance, Government of India.
Notes: The state-wise budget estimates for 2006-07 are derived by multiplying respective
state shares in total central releases for the year 2005-06 with total budget estimates of 8 CSS
for 2006-07. The MPLADS figures are estimated by taking the number of MPs (both Lok
Sabha and Rajya Sabha) in the respective states and assuming that 75 percent of the
allocations are directed to PRIs
5.3 ANALYSIS OF SURVEY RESULTS
The results of the survey in the selected districts in Chhattisgarh are analysed in
this section for the three tiers of panchayats.
Table 5.3 shows the distribution of the 3 sample ZPs, 12 JPs and 201 GPs by
number and type of the central schemes received by Chhattisgarh (see annex 9).
Table 5.3: Major Centrally Sponsored Schemes in Operation in the PRIs: Chhattisgarh
Schemes
ZP JP GP
Comparator Backward Comparator Backward Comparator Backward
DPAP 2 2
IAY 1 2 1 10 35 156
MP Funds 1 3
NFFWP 1 2 2 10 14 44
NREGS 2
Pension Scheme 41 149
RSVY 10 9
SGRY 1 2 2 10 42 159
SGSY 1 2 2 7
Source: Authors’ calculation.
51
The survey in Chhattisgarh shows that SGRY (rural employment) is the most
important scheme in terms of its presence. It is universally operational at all tiers in both
the districts clusters in the state. Other programmes with a significant presence at all three
tiers are the IAY (rural housing) and the NFFWP (food for work). The MP funds and
pension scheme is received only in GPs while the SGSY funds do not flow to the GPs. In
general across all three tiers of the PRI structure, all programmes have a higher incidence
of operation in backward districts than in the comparator set.
Table 5.4 shows the per capita distribution of funds by district for the centrally
sponsored schemes and the Central Finance Commission funds separately, for ZPs, JPs and
GPs respectively. For JPs and GPs the survey results show that the mean per capita CSS
funds received is higher for the backward districts as compared to the comparator districts
in the state for the year 2005-06 while the reverse is true for ZPs. Thus there is evidence of
CSS funds being distributed within the state in inverse proportion to the economic status in
terms of quantum of funds received, with an exception of ZPs.
Table 5.4: Mean Funds Received by PRIs Per Capita by District
(Rupees) PRIs Comparator districts Backward districts
Chhattisgarh Dhamtari Average Bastar Rajnandgaon Average
No. of ZPs 1 1 1
Centrally Sponsored Scheme 511.86 511.86 244.48 628.27 436.37
Central Finance Commission 39.15 39.15 85.37 73.56 79.47
Total 551.01 551.01 329.85 701.83 515.84
No. of JPs 2 6 4
Centrally Sponsored Scheme 142.05 142.05 278.23 278.94 278.52
Central Finance Commission 23.63 23.63 32.49 50.31 39.62
Total 165.68 165.68 310.72 329.25 318.13
No. of GPs 42 76 83
Centrally Sponsored Scheme 166.70 166.70 192.27 210.08 201.57
Central Finance Commission 12.45 12.45 28.45 21.15 24.64
Total 179.15 179.15 220.71 231.23 226.20
Source: Ibid.
The distribution of the per capita Central FC fund flows for the three tiers exhibit a
systematic pattern for the two sets of districts. The per capita flow at the ZPs is the highest
among both the clusters and comes down systematically in JPs and GPs. Across the three
52
tiers the mean per capita fund flows is more for the backward districts vis-à-vis the
comparator districts.
Table 5.5 shows the district wise share of CSS in the total funds received by
Chhattisgarh for the year 2005-06. After the merger of the contributory shares of Centre
and state, the CSS schemes are the dominant source of funding at PRI level.
Table 5.5: Share of Centrally Sponsored Schemes in Total Funds Received
PRIs Comparator districts Backward districts
Dhamtari Average Bastar Rajnandgaon Average
ZP 76.75 76.75 51.57 78.86 67.95
JP 59.64 59.64 70.26 71.88 70.99
GP 59.57 59.57 65.17 62.99 64.13
Source: Ibid.
The share of CSS in total funds received is higher in the backward districts as
compared to the comparator set at the JP and GP level while for the ZPs the reverse is
true. Across the three tiers in the comparator districts the share is highest for ZPs
followed by JPs and GPs in both the district clusters while in the backward districts the
share is highest for JPs followed by ZPs and GPs. A comparison across the three tiers of
panchayats in both the district clusters in Chhattisgarh reveal that the share of CSS funds
in total funds received is the least for GPs.
SGRY is the most important scheme among the GPs. The frequency distribution
of GPs by percent of SGRY to total funds received in shown in table 5.6. From the table
we see that in both the district clusters for the year 2005-06 in Chhattisgarh for about 5
percent of the GPs the SGRY funds account for about 60-80 percent of the total funds
received. For none of the GPs in the state the SGRY receipts account for more than 80
percent of the total receipts. In the comparator districts for about 48 percent of the GPs
the SGRY funds account for 40-60 percent of the total funds. The corresponding figure
for the GPs in the backward districts is 33 percent.
53
Table 5.6: Frequency Distribution of GPs by percent
of SGRY to Total Funds Received
Percent
Economic status of GP Percentage
Comparator Backward Comparator Backward
000 ... <=020 3 22 7.14 13.84
020 ... <=040 17 75 40.48 47.17
040 ... <=060 20 53 47.62 33.33
060 ... <=080 2 9 4.76 5.66
Total 42 159 100.00 100.00
Source: Ibid.
5.4 CONCLUSIONS
1. The number of CSS directed to the rural areas as identified from the Budget
documents in 2006-07 is 165 of which 41 bypass the state budget and the remaining 124
are routed through the state budgets. The total flow of funds from the centre to rural
areas (including the TFC grants) amounted to Rs. 63236 crore. Of the 41 schemes
bypassing the state budget, 10 schemes go directly to the PRIs while the remaining 31
schemes go to destinations other than PRIs.
2. The per capita budget estimates for eight CSS and MPLADS for Chhattisgarh for
the year 2006-07 is Rs 404.95 which is higher than the all India per capita budget
estimates of Rs. 254.59.
3. The survey results for Chhattisgarh show that in general across the three tiers of the
PRI structure, the CSS have a higher incidence of operation in the backward districts than
in the comparator set
4. Across the three tiers of panchayat the CSS funds are the dominant source of
funds. The share of CSS in total funds received is higher in the backward districts as
compared to the comparator set at the JP and GP level while for the ZPs the reverse is
true. A comparison across the three tiers in both the district clusters in Chhattisgarh
reveal that the share of CSS funds in total funds received is the least for GPs.
54
5. Across the three tiers of panchayats for the two district clusters there is evidence
of CSS funds being distributed within the state in inverse proportion to the economic
status with an exception of ZPs. For JPs and GPs the survey results show that the mean
per capita CSS funds received is higher for the backward districts as compared to the
comparator districts in the state for the year 2005-06
6. The per capita Central FC fund flows in Chhattisgarh is highest for ZPs followed
by JPs and GPs. Across the three tiers the mean per capita fund flows is more for the
backward districts vis-à-vis the comparator districts.
7. In Chhattisgarh for only 5 percent of the GPs in both the district clusters the
SGRY funds account for more than 60 percent of the total funds received during the year
2005-06 and for none of the GPs in the state the share of SGRY funds in total funds is
more than 80 percent.
55
6. FISCAL MONITORING
6.1 AUDITING OF FUNDS AT THE THREE TIERS
The 73rd
Constitutional amendment provides that the State Legislature may make
provisions with respect to the audit of the panchayat accounts. Accordingly, all the states
have incorporated this provision in their respective PRIs Acts. Chhattisgarh1 has also
incorporated such provisions in its conformity Act (State Panchayati Raj Act).
The state of Chhattisgarh has clearly stated in its Act that the accounts of the
panchayats (all three tiers) will be audited by an independent audit organization under the
control of the state government. Such audit will not be affected by any other audit
ordered by the Accountant General of the state. At the centre, Comptroller and Auditor
General, as per their Act, 1971, has the power to audit all expenditure from the
Consolidated Fund of India and of each state,2 through the state officers of the
Accountant General.
1 Section 129 of Chhattisgarh Panchayati Raj (Amended) Adhiniyam, 2004, provides for a separate and
independent Audit Organization under the control of the State Government to perform audit of accounts of
panchayats. The state has made Chhattisgarh Panchayat Audit Rules, 1997, for the purpose. The Audit
Rules provides that the accounts of a Panchayat shall be audited annually and as far as possible, before the
close of the succeeding financial year. This requirement of annual audit shall be independent and not
affected by any other audit ordered by Accountant General of Chhattisgarh. 2 Section 13 of the C&AG’s (Duties, Powers and Conditions of Service) Act, 1971 (56 of 1971) states that
it shall be the duty of the C&AG to audit all expenditure from the Consolidated Fund of India and of each
state. Therefore, to the extent the local bodies are performing agency functions on behalf of the Central or
state governments, the duty of C&AG would include the audit of expenditure incurred by the local bodies
too. As per Section 14 (1), where any body or authority receives grant or loan from the Consolidated Fund
of India or of any state amounting to not less than rupees twenty-five lakh and the amount of such grant or
loan is not less than seventy-five per cent of the total expenditure of that body or authority, the C&AG
shall, subject to the provision of any law for the time being in force, applicable to such body or authority,
audit all receipts and expenditure of that body or authority and report on the receipts and expenditure so
audited by him. Further, since Section 14 (2) waives the limit of ‘seventy-five per cent’, if the amount
exceeds rupees one crore, most of the panchayats at district level will invariably fall in the purview of audit
by C&AG. Section 15 states that when any grant or loan is given for a specific purpose from the
Consolidated Fund of India or of any State to any body or authority, the C&AG shall scrutinize the
procedures by which the sanctioning authority satisfies itself as to the fulfillments of the conditions subject
to which such grants were given.
56
With respect to audit of panchayats accounts, the Eleventh Finance Commission
in its report3 has recommended that the responsibility of exercising control and
supervision over the maintenance of panchayats accounts and their audit should be
entrusted to the C&AG who may get it done through C&AG’s own staff or by engaging
an outside agency. The Director of Local Fund Audit, or any other agency assigned the
task of auditing of panchayats’ accounts is to work under the technical and administrative
supervision of the C&AG. For this purpose the EFC has also recommended on an
average an amount of Rs 4000 per panchayat per annum. For Chhattisgarh the details of
allocation by EFC and its utilisation are expressed in table 6.1. The table indicates that
Chhattisgarh has fully utilized the fund allocated for the maintenance of accounts and
auditing.
Table 6.1: Provision and Utilisation of Grants
for Maintenance of Accounts and Auditing
(Rs. lakh)
Annual allocation
by EFC
Utilisation
reported
Percent
utilisation
370.83 370.83 100.00
Source:Finance Commission Division, 2006, Ministry of
Finance, Government of India.
The details with respect to the status of process of audit at the ZP, JP and GP
level based on the survey carried out in the selected ZPs, JPs, and GPs in the state are
presented in table 6.2.
Table 6.2: Frequency Distribution of PRIs by Year Accounts Last Audited
Year
Cumulative Percentage
ZP JP GP
Comparator Backward Comparator Backward Comparator Backward
2006-07 100.00 50.00 0.00 0.00 11.90 15.72
2005-06 100.00 0.00 20.00 59.52 48.43
2004-05 0.00 70.00 69.05 62.89
2003-04 50.00 70.00 80.95 73.58
2002-03 100.00 70.00 85.71 85.53
2001-02 90.00 85.71 85.53
2000-01 100.00 85.71 85.53
NR/NA 100.00 100.00
Source: Authors’ calculations.
Note: NR/NA: Information not available
3 The Twelfth Finance Commission has not given any particular recommendation in this regard.
57
From the table we see that the process of audit of accounts at the ZP level is much
better than JP level. In the inter-cluster comparison the comparator clusters performed far
better than the backward set at both the levels of ZP and JP. Further, it is observed that at
GP level audits are the most delayed of all the three tiers. At the GP level where most of
the important schemes such as SGRY and NREGS are targeted and implemented,
therefore, delayed audit at the GP level is more worrisome. It is also observed that across
all tiers, process of auditing is more delayed in backward districts as compared to
comparator set.
6.2 UTILISATION OF CENTRAL FUNDS: BACKWARD AND
COMPARATOR DISTRICTS
The table 6.3 gives details about the utilisation of major Centrally Sponsored
Scheme (CSS) funds at the upper two tiers (i.e., ZP and JP) of PRIs.
Table 6.3: Frequency Distribution of ZPs and JPs by Percent Utilisation
of Major CSS Funds Received During the Year
Percentage
Cumulative Percentage
ZP JP
Comparator Backward Comparator Backward
100 + 40.00 30.00 33.33 38.30
80 ... <=100 100.00 60.00 77.78 74.47
60 ... <=80 80.00 77.78 85.11
40 ... <=60 90.00 77.78 95.74
20 ... <=40 90.00 77.78 95.74
00 ... <=20 100.00 100.00 100.00
Source: Ibid.
Note: Major CSS in Chhattisgarh are SGRY, NFFWP, PMGSY, IAY and SGSY.
Between the two tiers the utilisation of major CSS funds reported a higher
utilization at the ZP level. At the ZP level, between the two clusters, the comparator
districts indicated a much higher utilisation than the backward set while at the JP level
the comparator district show a slightly higher utilization than those in the backward
district cluster.
58
6.2.1 Utilisation of SGRY Funds with Gram Panchayat/State Government
Appointed Record Keeper
At the GP level amongst the major CSS, the SGRY is one of the most important
schemes implemented at this level. The utilisation of SGRY funds separately by type of
record keeper (GP/state appointed) is presented in table 6.4. It is observed from the table,
between two clusters, the GPs in the comparator district cluster reported higher utilisation
than those in the backward cluster irrespective of the type of record keeper. More than 80
percent rate of utilisation is achieved by 64 percent of comparator GPs while in backward
cluster it is less than 60 percent. In the comparator set the utilisation by type of record
keeper show a higher rate of utilisation in GPs with GP appointed record keepers, while
for GPs in the backward district cluster about the same rate of utilisation is reported by
both the types of record keepers. In general the utilisation is somewhat higher in
comparator districts as compared to the backward set. In particular, it is more in those
GPs which have GP appointed record-keeper.
Table 6.4: Matrix of GPs by type of Record Keeper and Percent Utilisation of
SGRY Funds Received During the Year
Percentage
Cumulative percentage of GP
Comparator Backward
Appointed by
GP
State
govt. Total GP
State
govt. Total
100 + 14.29 25.71 23.81 27.27 33.04 31.45
80 ... <=100 71.43 62.86 64.29 54.55 60.87 59.12
60 ... <=80 100.00 82.86 85.71 86.36 86.09 86.16
40 ... <=60 94.29 95.24 97.73 93.91 94.97
20 ... <=40 94.29 95.24 100.00 99.13 99.37
00 ... <=20 100.00 100.00 100.00 100.00
Type of record
keeper ( in %) 16.67 83.33 100.00 27.67 72.33 100.00
Source: Ibid.
With respect to the appointment of record keeper, from the table we see that in
Chhattisgarh record keepers are largely state-appointed. In the comparator districts
around 83 percent of record-keepers are state-appointed whereas in backward districts it
is about 72 percent.
59
6.2.2 Nature of Utilisation of SGRY Funds by Gender of Sarpanch
The details of utilisation of SGRY funds under different activities by gender of
sarpanch is expressed in table 6.5. As shown in table, in aggregate, construction and
maintenance of roads and culverts are the dominant choice, followed by the construction
and maintenance of water works and construction and maintenance of buildings, with the
exception of male headed GPs in the backward district in the state where the second
choice of work is the construction and maintenance of buildings in place of construction
and maintenance of water works. Between the clusters, in comparator districts there is not
much difference in choice for roads and culverts and construction and maintenance of
buildings, however, in case of construction and maintenance of water works female
preferred more than their male counter parts. In backward cluster female sarpanchs prefer
construction and maintenance of roads and culverts whereas construction and
maintenance of water works and building are preferred by male sarpanchs.
Table 6.5: Matrix of GPs by Total Constituents of Nature of Utilisation
of SGRY Funds by Gender of Sarpanch
Percent
Constituent
Gender of sarpanch
Comparator Backward Aggregate
Female Male Total Female Male Total Female Male Total
Construction and
maintenance of
roads & culverts 47.71 48.32 48.10 64.87 50.54 56.16 62.01 50.12 54.71 Construction and
maintenance of
buildings 9.83 10.00 9.94 9.41 22.69 17.48 9.48 20.30 16.13 Construction and
maintenance of
water works 35.48 26.70 29.85 13.35 16.08 15.01 17.03 18.08 17.68
Plantation 0.52 4.20 2.88 1.07 0.70 0.85 0.98 1.36 1.21
Administrative 0.21 0.31 0.28 0.40 0.44 0.42 0.37 0.41 0.40
Others 6.25 10.46 8.95 10.90 9.55 10.08 10.13 9.72 9.88
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: Ibid.
The gender wise preference for work done through SGRY funds thus obtained for
both the district clusters in Chhattisgarh is now statistically tested for statistical
60
significance. We test for the null hypothesis H0: (1 = 2) i.e., there is no gender
difference in preferences for the type of work done against the alternative hypothesis H0:
(1 ≠ 2) i.e., there exist gender differences in preferences. Here 1 is the proportion of
total funds utilised by female-headed GP for a particular type of work and 2 represents
the funds utilised by the male-headed GP for the same type of work. The type of work
considered are a) construction and maintenance of roads and culverts, b) construction and
maintenance of buildings and c) construction and maintenance of water works in the GP.
The results are tabulated in table 6.6. From the table it can be observed that the null
hypothesis of no gender difference in preferences cannot be rejected in the comparator
district of Dhamtari in Chhattisgarh. In the backward district cluster, however, the results
indicate that there exists a statistically significant male preference for the construction
and maintenance of buildings.
Table 6.6: Test for Differences in Preferences Between Female
and Male Sarpanch in Utilization of SGRY Funds
Type of SGRY works
Comparator
districts
Backward
districts
Construction & maintenance of roads & culverts -0.0378 1.8017
Construction & maintenance of buildings -0.0178 -2.3495 #
Construction & maintenance of water works 0.5852 -0.4772
Source: Authors’ calculations based on data in table 6.5
Note: # Null hypothesis is rejected at 5% level of significance
6.2.3 Utilisation of Central Finance Commission Funds
The utilisation of central finance commission funds at the GP level is presented in
table 6.7. Comparatively, between two the clusters, comparator set reported a higher
utilisation than the backward cluster. More than 57 percent comparator GPs showed 80
per cent or more utilisation, whereas only 40 percent backward GPs could achieve this
utilisation rate. The data show non-receipt of FC funds to the extent of 42.86 percent in
comparator district GPs and 6.92 percent in GPs in the backward districts.
61
Table 6.7: Frequency Distribution of GPs by Percent
Utilisation of Central FC Funds Received
During the Year
Percentage
Cumulative percentage
Comparator Backward
NR/NA* 42.86 6.92
100 and above 42.86 8.81
80 ... <=100 57.14 40.88
60 ... <=80 61.90 57.86
40 ... <=60 71.43 67.30
20 ... <=40 73.81 77.36
00 ... <=20 76.19 81.13
00 @
100.00 100.00
Source: Ibid.
Note: * No funds received;
@
Funds received but not utilized at all
6.3 UTILISATION OF STATE FUNDS: BACKWARD AND
COMPARATOR DISTRICTS
6.3.1 Utilisation of State Scheme Funds
The utilisation of state scheme funds at the three tiers of PRIs is discussed in table
6.8. The state schemes applies to funds entirely originating in state-level schemes. As
shown in table the utilisation of state scheme funds in Chhattisgarh is in general higher at
the ZP and JP level and lowest at the GP level. Between classes of districts at ZP and JP
level, it is for the most part better in comparator districts than the backward set. However,
at the GP level backward cluster showed higher utilisation than comparator set. More
than 90 per cent backward GP showed 80 per cent or more utilisation whereas
comparator cluster indicated lower number of GPs achieved this rate of utilisation. About
3 per cent of backward cluster GPs showed non-receipt of funds under this head.
62
Table 6.8: Frequency Distribution of ZPs by Percent Utilisation
of State Scheme Funds Received During the Year
Percentage
Cumulative Percentage
ZP JP GP
Comparator Backward Comparator Backward Comparator Backward
NR/NA* 0.00 0.00 0.00 0.00 0.00 3.14
100 and above 100.00 0.00 0.00 50.00 11.90 9.43
80 ... <=100 50.00 100.00 90.00 78.57 93.08
60 ... <=80 50.00 100.00 85.71 94.97
40 ... <=60 50.00 90.48 96.86
20 ... <=40 100.00 95.24 98.74
00 ... <=20 97.62 99.37
00 @
100.00 100.00
Source: Ibid.
Note: * No Funds Received.
@ Funds received but not utilized at all
6.4 UTILISATION OF NREGS FUNDS IN 2006-07
6.4.1 NREGS in the State of Chhattisgarh
The number of NREGS districts covered in Chhattisgarh is listed in table 6.9. In
Chhattisgarh about 11 districts are covered under NGRES. Of this, three NREGS districts
of Bastar, Dhamtari and Rajnandgaon are covered in this study.
Table 6.9: Coverage of NREGS Districts in Chhattisgarh
S. No. District S. No District
1 Bastar 7 Kabirdham
2 Bilaspur 8 Koriya
3 Dantewada 9 Raigarh
4 Dhamtari 10 Rajnandgaon
5 Jashpur 11 Surguja
6 Kanker
Source: Government of India, Ministry of Rural Development, 2006.
Note: Highlighted districts in the states are covered in this study.
6.4.2 Progress of Utilisation
The state-wise details regarding the issue of job cards, employment demanded and
provided, fund released and the expenditure incurred on the works under taken is
presented in table 6.10. The percent expenditure incurred on these works from the total
release is indicated in the last column of the table 6.10. Chhattisgarh has shown 56.8
63
percent utilisation rate which is above both, four state average utilisation of 41.50 percent
and also above 23 states average of 34.1 percent.
Table 6.10: Progress of NREGS: Funds Released and Expenditure
on Works Undertaken (as on 21.8.06)
(Rs. lakh)
State No of
districts
Total
rural
house-
holds
Job cards
Employ-
ment de-
manded
Employ-
ment
provided
No. of
works
1 2 3 4 5 6 7
More than 5 percent of total exp. Chhattisgarh 11 1792584 1534636 165245 162480 9671
Total (4 states) 54 10647831 9197020 3644990 3377377 119949
Total ( 27 states) 200 57541426 24230592 9558234 8824994 242438
State Funds
released Exp.
Release
per
dist.
Exp.
per
dist.
Exp.
(col. 9)
as % of
total
exp.
Rank-
based
on %
exp.
Exp as
% of
release
per dist.
1 8 9 10 11 12 13 14
More than 5 percent of total exp. Chhattisgarh 17322 9834 1575 894 7.24 5 56.8
Total (4 states) 222322 92259 4117 1709 67.9 41.5
Total ( 27 states) 438642 135799 1990 679 100
Total (23 states) 397936 135799* 34.1
Source: Ibid.
Notes: NREGS does not extend to Goa. Funds released pertain to April-August 2006-07.
* Only 23 states including 4 states considered in the present study report figures for
expenditure.
Chart 6.1: Utilisation Pattern of Fund Released and Expenditure
Incurred Under NREGS
173.22
98.34
0
20
40
60
80
100
120
140
160
180
200
(Rs
Cro
res)
Release
Expenditure
64
The pattern of funds released and the expenditure incurred on the works
undertaken in Chhattisgarh under the NREGS is shown in chart 6.1.
Chart 6.2 indicates the percent share of Chhattisgarh in the total release and
expenditure of NREGS funds.
Chart 6.2: Percent Share of Fund Released and Expenditure
incurred under NREGS
7.24
4.35
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Per
cen
t
% Release
% Expen.
A look at the total expenditure incurred under NREGS shown in table 6.10 for
Chhattisgarh reveal that till august 2006 the share of the state alone in total expenditure
was only 7.24 percent.
6.5 CONCLUSIONS
1. As per the State PRI Act, the primary responsibilities of auditing of panchayats
accounts are assigned to independent audit organizations under the control of the state
government. Such audit, however, will not be affected by any other audit ordered by the
Accountant General of the state. Simultaneous test audits are also permissible, under the
over-riding powers of the C&AG.
2. With respect to the process of auditing of accounts, the survey results show that
among the three tiers the auditing is most delayed at the GP level. Delayed audit at the
GP level is a matter of serious concern because most of the important schemes such as
65
SGRY and NREGS are largely targeted and implemented at this level. Further, between
two district clusters, auditing is somewhat more delayed in the backward district cluster.
3. As regards utilisation of funds at the middle and district tiers of panchayat, the
utilisation rates are much higher at the district tier. Utilisation of CSS funds is higher in
comparator districts in the state vis-à-vis the backward districts for both ZPs and JPs.
4. In aggregate between the district clusters there is no systematic difference in the
utilisation rate of SGRY funds. However, in the comparator districts the rate of utilisation
of SGRY funds was higher in GPs having GP appointed record keeper vis-à-vis those
having state appointed record keeper. Whereas in the backward district cluster the GPs
with state appointed record keeper GPs showed a higher utilisation of SGRY funds.
5. In Chhattisgarh the GP record-keepers are largely state-appointed. In the
comparator districts more than 80 percent of the record keepers are state appointed while
in the backward districts around 72 percent are appointed by the state government.
6. The nature of utilisation of SGRY funds by gender of sarpanch shows that
construction and maintenance of roads and culverts are the dominant choice in
Chhattisgarh, followed by construction and maintenance of water works and building
construction. Tests for gender wise preferences of works done through SGRY funds
reveal that the null hypothesis of no gender difference in preferences cannot be rejected
in the comparator district set in Chhattisgarh. In the backward district cluster, however,
the results indicate existence of a statistically significant male preference for the
construction and maintenance of buildings.
7. Utilisation of the Central Finance Commission funds at GP level indicates higher
utilisation by comparator set than backward cluster. The survey results reveal non-receipt
of FC funds to the extent of 43 percent in comparator district GPs and around 7 percent in
the backward district in the state.
66
8. A Comparison of the rate of utilisation of state scheme funds across the three tiers
of panchayats in the state reveal higher utilisation by the ZPs followed by the JP and GPs.
Between district clusters, it is for the most part better in comparator districts except at GP
level where backward district cluster showed higher utilisation.
9. As regards utilisation of NREGS funds released up to August 2006, Chhattisgarh
show a higher utilisation as against the average across all reporting states.
7.0
67
7. CONCLUSION
7.1 THE FORMAL STATUS OF RURAL DECENTRALIZATION
The state governments are assigned exclusive legislative domain over local
governments following the 73rd
amendments to the Constitution and are required to pass
conformity acts either through introduction of new legislation or amending the existing
acts. The state of Chhattisgarh, which came into existence as a separate state in November
2000 was earlier part of undivided Madhya Pradesh, and is fully in conformity with the
provisions of 73rd
amendment to the Constitution. There are 9139 Gram Panchayats, 146
middle-level panchayats i.e., the Janpad Panchayats, and 16 Zilla Panchayats in the state.
Post amendment, the first elections of PRIs in the state were held in January 2005.
Prior to this, elections were conducted in January 2000 for the combined state of Madhya
Pradesh. State Finance Commissions at quinquennial intervals are among the mandated
requirements to review the finances of local bodies and recommend the principles that
should govern the allocation of funds and taxation authority to local bodies. The state of
Chhattisgarh constituted its first SFC on August 2003. The Commission has submitted its
report in May 2007. Till the period the recommendations of its first SFC become
application the state has adopted the recommendations of the first and second SFCs of
Madhya Pradesh for the relevant years.
The second SFC of Madhya Pradesh recommended assigning 2.93 percent of the
net own tax revenues. The PRIs, in addition to tax assignments, receive establishment
grants and plan grants for various development schemes. The PRIs are also empowered to
raise own revenues comprising of own taxes and own non taxes. In Chhattisgarh the
revenue raising powers by the state PRI statutes are assigned mainly to GPs and to a
limited extent to JPs in Chhattisgarh. Some of the taxes assigned are designated as
obligatory where the levy is mandatory and others as optional. The evidence from the field
survey on revenues collected is summarized in section 7.5.
The state governments have the authority to devolve functional and financial
power to rural local bodies to enable them to function as institutions of self government.
68
The eleventh schedule of the Constitution provides a comprehensive list of functional
heads that the states are expected to devolve along with funds and functionaries. A
quantitative estimate of functional devolution through budgetary expenditure assignment
is available in chapter 2 of the overall report.
7.2 SUMMARY OF FLOWS TO PRIS FROM CENTRE, STATES AND
OWN REVENUES
The mean per capita fund flows to the three tiers of panchayats from the Centre,
the state government of Chhattisgarh and the own tax and own non-tax revenues i.e., own
revenues of the PRIs based on the field survey in the selected backward and comparator
districts in Chhattisgarh for the fiscal year 2005-06, are summarized in table 7.1.
Table 7.1: Per capita flows to PRIs from Centre, States and own revenues (Rs.)
Comparator districts Backward districts
GP JP ZP GP JP ZP
Central transfers 179.15
(66.36)
165.68
(76.33)
551.01
(83.29)
226.20
(71.04)
318.13
(86.32)
515.84
(81.26)
State transfers 79.84
(29.57)
50.86
(23.43)
110.51
(16.71)
87.10
(27.35)
48.95
(13.28)
118.73
(18.70)
Own revenue 10.99
(4.07)
0.52
(0.24)
0.00
(0.00)
5.11
(1.60)
1.48
(0.40)
0.20
(0.03)
Own tax 4.10 0.00 0.00 0.98 0.00 0.00
Own non-tax 6.89 0.52 0.00 4.14 1.48 0.20
Total 269.98 217.06 661.52 318.41 368.56 634.77
Source: Author’s calculations
Note: Figures in parenthesis refer to percentage of the total.
Central flows are the sum of flows under the various CSS and TFC transfers. The
fund flows from the state government consists of flows under the various state schemes
and transfers based on the recommendations of the SFC. Because of the manner in which
these flows are defined, Central flows would include all receipts from Central schemes
including the funding from the state government flows into these schemes. So defined,
Central transfers are the dominant source of fund flows to the PRIs in the state followed
by state transfers and own revenues. In general, the mean per capita receipt is more in the
backward districts, with two exceptions: ZPs for Central flows, JPs for state flows.
69
7.3 FUND FLOWS FROM THE CENTRE
The number of CSS directed to the rural areas as identified from the Budget
documents in 2006-07 is 165 of which 41 bypass the state budget and the remaining 124
are routed through the state budgets. The total flow of funds from the centre to rural areas
(including the TFC grants but excluding Central assistance to State Plans) amounted to
Rs. 63236 crore, around 1.62 percent of GDP. Of the 41 schemes bypassing the state
budget, 10 schemes go directly to the PRIs while the remaining 31 schemes go to
destinations other than PRIs. Of the ten schemes identified as flowing directly to the PRIs,
the per capita budget estimates for eight CSS administered by the Ministry of Rural
Development for which a state-wise break-up is possible, and MPLADS for Chhattisgarh
for the year 2006-07 is Rs 404.95 which is higher than the all India per capita budget
average of Rs. 254.59.
The field survey, which collected figures for PRI receipts from all sources for the
fiscal year 2005-06, does not yield state-level estimates. As already stated in Chapter 2 of
the report the limitations imposed by the design of the UNDP study meant that the field
survey results could only be presented in the form of separate findings for the set of pre-
selected backward districts in the states, juxtaposed against those for a comparator set,
purposively chosen through principal component analysis so as to represent areas with
higher developmental indicators.
It should be reiterated once again that the field survey records scheme specific data
after merger of the contributory share of the Centre and states while the budget estimates
for eight CSS and MPLADS for Chhattisgarh only includes Centre’s share. Keeping this
limitation in mind the per capita estimates of central flows of Rs.895.84 for the
comparator set and Rs.1060.17 for the backward districts given in table 7.1 cannot be
compared with the per capita budget estimates of Rs.404.95 for eight CSS and MPLADS
for Chhattisgarh.
SGRY (rural employment) is the dominant scheme among the GPs in the state and
is also operational at the other two tiers in both the districts clusters. Other programmes
70
with a significant presence at all three tiers are the IAY (rural housing) and the NFFWP
(food for work). In general across all three tiers of the PRI structure, all programmes have
a higher incidence of operation in backward districts than in the comparator set.
A comparison across the three tiers in both the district clusters in Chhattisgarh reveal
that the share of CSS funds in total funds received is the least for GPs.
The per capita Central Finance Commission fund flows in Chhattisgarh is highest
for ZPs followed by JPs and GPs. Across the three tiers the mean per capita fund flows is
more for the backward districts vis-à-vis the comparator set.
7.4 FUND FLOWS FROM THE STATE GOVERNMENT
The fund flows from the state government to PRIs consists of flows under the
various state schemes, assigned revenues and grants-in-aid. The assigned revenues
primarily comprise assignment of a specific or a predetermined proportion of the principal
state tax or the proceeds of a surcharge or cess levied by the state government on its
principal tax for the exclusive use of the PRIs on the basis of recommendations of SFC.
The grants-in-aid broadly cover establishment costs, honorariums of the elected members,
some construction and repairing of panchayat establishments, compensation grants in
respect of taxes/non-taxes withdrawn from PRIs, incentive grants, and grants for specific
schemes.
The survey results reveal that across the three tiers on an average the overall state
funds transferred per capita under different state schemes and devolutions and grants in the
state is higher in backward districts with a single exception of JPs. While the GPs and JPs
in the backward districts receive higher per capita state scheme transfers, the per capita
devolutions and grants are higher in the comparator district.
A comparison of the mean per capita state transfers across the three tiers of
panchayats in the state reveal that per capita state transfers are the highest for ZPs
followed by GPs and JPs. The share of state transfers in the total funds received by the
71
three tiers of panchayats, however, show a higher share for GPs as compared to the upper
two tiers.
7.5 OWN REVENUES
Revenue raising powers by the state PRI statutes are assigned mainly to GPs and to
a limited extent to JPs in Chhattisgarh. The ZPs have not been assigned any revenue
raising powers. Some of the taxes assigned are designated as obligatory where the levy is
mandatory and others as optional.
The stylized facts of policy consequence emerging from the field survey evidence
on the own revenues collected by the three tiers of panchayats in the state are as follows.
Non-tax revenues are the dominant source of own revenues of GPs across the
districts. This source accounts for nearly 80 percent of own revenues in the backward
districts and 62 percent in the comparator set. Non-tax revenues are derived principally
from lease and auction and property rental. The mean per capita own non-tax revenue on
an average is higher in the comparator set vis-à-vis the backward districts.
Assignment of tax rights to GPs and designating some of the taxes as obligatory
has not resulted in all of them levying some form of taxes. A large number, 72 percent of
GPs in backward and 40 percent in the comparator set do not exercise their tax rights.
Among the taxes collected by the GPs the house tax, lighting tax, animal taxes and water
rates are most usually levied. The profession tax is not levied in the selected districts, even
though it is obligatory.
The tax performance in terms of both the percent of GPs exploiting their tax
sources and its share in own revenues is higher for the comparator district of Dhamtari as
compared to that of the backward districts in the state. The per capita own tax collection
confirms this pattern.
Across the three tiers the own tax performance of the GPs in terms of its share in
own revenues and in terms of per capita collections is higher than that of the middle and
district tiers panchayats.
72
The own revenues of the JPs and ZPs comprise income from non-tax sources only
despite JPs being assigned tax rights. The important non-tax sources are lease and auction,
property rental and interest receipts. The last source depends upon the amount of unspent
funds under different schemes remaining with the banks and is not based on any revenue
effort the PRIs. Interest income from low utilization of CSS funds at the upper two tiers is
a matter of concern. This is a result of non-lapsability of these funds and carries an
implicit incentive for not spending. Introducing the lapsability clause would act as
incentive to encourage higher utilization of these CSS funds meant for developmental
activities and poverty alleviation.
The per capita own tax revenues figures for 2002-03 from the TFC reports falls in
the range reported by the survey of the sampled districts. However, the per capita non-tax
revenue figures from the TFC reports for Chhattisgarh, which is at Rs.32 is higher than the
survey figures which fall in the range of Rs. 0.2 to Rs.6.89.
7.6 MONITORING AND UTILIZATION
Under the 73rd
Constitutional amendment, the responsibility of providing for audit
of panchayat accounts is assigned squarely to the respective State Legislatures.
Accordingly, the conformity Acts in the state of Chhattisgarh which is fully compliant
with the Constitutional amendment, provide for annual audits by an independent audit
organization under the control of the state government. Such audit, however, will not be
affected by any other audit ordered by the Accountant General of the state. Simultaneous
test audits are also permissible, under the over-riding powers of the C&AG.
The survey results show that auditing is most delayed at GP level, relative to the
higher two tiers. Since the GP is the level at which major schemes like SGRY and NREGS
are largely (though not exclusively) targeted and implemented, delayed audit at GP level is
a matter of serious concern. Across all tiers, auditing is somewhat more tardy in backward
districts.
73
There is higher utilisation of funds at the district tier than at the middle tier, and in
the comparator set in the state vis-à-vis the backward districts.
Utilisation of CSS funds is confined to the SGRY scheme alone because of its
universal coverage. Utilisation of SGRY funds is higher for GPs in the backward district
in the state than in the comparator districts.
In Chhattisgarh the GP record-keepers are largely state-appointed. In the
comparator districts around 83 percent of record-keepers are state-appointed whereas in
backward districts it is about 72 percent. There is no systematic difference between GPs
with state appointed record keepers and those where the record keepers are GP appointed.
Construction and maintenance of roads and culverts are the dominant choice in
Chhattisgarh, followed by construction and maintenance of water works and building
construction. Tests for gender wise preferences of works done through SGRY funds reveal
that the null hypothesis of no gender difference in preferences cannot be rejected in the
comparator district of Dhamtari in Chhattisgarh. In the backward district cluster, however,
the results indicate existence of a statistically significant male preference for the
construction and maintenance of buildings.
As regards utilisation of NREGS funds released up to August 2006, Chhattisgarh
show a higher utilization of 56.8 percent as against the average across all reporting states
of 34.1 percent.
Utilisation of the Central Finance Commission funds at GP level indicates higher
utilisation by comparator set than backward cluster. The survey results reveal non-receipt
of FC funds to the extent of 43 percent in comparator district GPs and around 7 percent in
the backward district in the state.
A comparison of the rate of utilisation of state scheme funds across the three tiers
of panchayats in the state reveal higher utilisation by the ZPs followed by the JP and GPs.
Between district clusters, it is for the most part better in comparator districts except at GP
level where backward district cluster showed higher utilization. At the GP level the higher
74
utilization in the backward districts is an encouraging result which comes out from the
survey in the state. Effective utilisation of funds devolved to the PRIs in general and GPs
in particular is of paramount importance from the point of alleviating rural poverty.
ANNEXES
75
Annex 1
Principal Components Analysis (PCA)
The aim of the method of Principal Components is the construction out of a set of variables,
Xj’s (j = 1,2, …,k) of new variables (Pi) called the principal components, which are linear
combination of the X’s.
P1 = a11 X1 + a12 X2 + ……+ a1k Xk
P2 = a21 X1 + a22 X2 + ……+ a2k Xk
. . . . .
. . . . .
Pk = ak1 X1 + ak2 X2 + ……+ akk Xk
The a’s, called the loadings, are chosen so that the constructed principal components satisfy
the following two conditions:
i. the principal components are uncorrelated (i.e., orthogonal), and
ii. the first principal component P1 absorbs and accounts for the maximum possible
proportion of the total variation in the set of all X’s, the second principal component
absorbs the maximum of the remaining variation in the X’s (after allowing for the
variation accounted for by the first principal component), and so on.
The first step is to get the estimates of the loadings (i.e., the a’s) which will help transform the
X’s into orthogonal artificial variables called the principal components (for details relating to
the estimation of the a’s and testing of its significance refer to Koutsoyiannis, 1977). Having
estimated the a’s we must finally decide upon some rule of decision, some criterion, on the
basis of which to decide how many of the principal components to retain in the analysis.
The maximum number of principal components is equal to the number of X’s. However, only
a small number of P’s is usually retained in the analysis. There are various criteria which have
been suggested while deciding how many principal components to retain in any particular
study. The most common are the Kaiser’s criterion, Cattell’s ‘Scree test’, and the Bartlett’s
criterion. We have, in our analysis, used the Kaiser’s criterion which suggests that only those
principal components having latent root1 greater than one are considered essential and should
be retained for the analysis.
1 Also known as the Eigen value. The Eigen vector of a transformation is a vector whose direction is
unchanged by that transformation. The factor by which the magnitude is scaled is called the Eigen
value (or latent root) of the vector.
76
Annex 2
Ranking of Districts
Chhattisgarh
District Ranking
District Ranking
PCA PCY HDI PCA PCY HDI
Bastar 14 14 16 Kanker 12 13 12
Bilaspur 4 9 8 Korba 13 1 1
Champa 1 11 5 Korea 15 4 13
Dantewada 16 2 9 Mahasumund 2 7 3
Dhamtari 5 5 6 Raigarh 6 10 10
Durg 7 3 2 Raipur 3 6 4
Jashpur 10 12 7 Rajnandgaon 11 8 14
Kabirdham 8 16 15 Surguja 9 15 11
77
Annex 3
Selected ZPs, JPs and GPs in Chhattisgarh ZP JP GP
1 2 3
Bastar (B) 1. Bastanar 1. Burgum 4. Turangur
2. Mutanpal 5. Sadra Bodenar
3. Lalaguda
2. Darbha 1. Lendra 6. Chindawada
2. Chindbahar 7. Darbha
3. Keshapur 8. Tahakwada
4. Tirathgarh 9. Koleng
5. Mamadpal 10. Edjepal
3. Lohandiguda 1. Chandela 7. Badrenga
2. Chindgaon 8. Aanjar
3. Parapur 9. Michnar
4. Badedharaur 10. Alnar
5. Belar 11. Chitrakot
6. Kuthar
4. Makdi 1. Otenda 8. Tamrawand (F.V.)
2. Katagaon 9. Anatpur
3. Budra 10. Chhinari (F.V.)
4. Kurlubahar 11. Sonabeda
5. Torandi 12. Ondargaon (F.V.)
6. Babai 13. Badegodsoda
7. Sampur 14. Chhatodi (F.V.)
5. Pharsgaon 1. Bokrabeda 9. Mainpur
2. Deogaon 10. Banchapai
3. Chichadi 11. Badeodagaon
4. Patoda 12. Godma
5. Mode 13. Kongud
6. Kotpad 14. Bhanpuri
7. Borgaon 15. Badedonagar
8. Bhumka
6. Bastar 1. Bhanpuri 12. Baniyagaon
2. Bodanpal 13. Seoni
3. Cherakur 14. Sorgaon
4. Godiyapal 15. Kumhli
5. Kawadgaon 16. Salemeta-2
6. Chapka 17. Khorkhosa
7. Bagmohlai 18. Ratenga
8. Semalnar 19. Murkuchi
9. Dubeyumargaon 20. Bhainsgaon
10. Madhota 21. Bastar
11. Badechakwa
78
ZP JP GP
1 2 3
Rajnandgaon (B) 1. Mohla 1. Mandavitola 9. Kaneri
2. Pendakodo 10. Pandarawani
3. Adamgondi 11. Kakaipur
4. Gidhali 12. Vasdi
5. Mungadih 13. Khulardhoh
6. Bhojtola 14. Rengakathera
7. Ghawadetola 15. Marakatola
8. Madiyanwadvi
2. A. Chowki 1. Rengakathera 9. Devarsur
2. Amatola 10. Taramtola
3. Khursipur 11. Kudurghoda
4. Joratarai 12. Tirpemeta
5. Hitaguta 13. Tatekasa
6. Khadkhadi 14. Semharbandha
7. Bagnara 15. Mahud Machandur
8. Parsatola 16. Chikhali
3. Chhuikhadan 1. Sahaspur 13. Kanshitola
2. Darbantola 14. Khouda
3. Kritbans 15. Devincha
4. Daniya 16. Kumharwada
5. Udan 17. Devpuraghat
6. Pandria 18. Nachaniya
7. Gatapar 19. Khairanawapara
8. Laxmanpur 20. Devpura
9. Budhanbhat 21. Jhuranadi
10. Suradabari 22. Nadiya
11. Dhodha 23. Gerukhadan
12. Ghirgholi 24. Thandar
4. Chhuria 1. Bholapur 15. Joshilamati
2. Ghupsal (Chhu) 16. Dharmutola
3. Keshotola 17. Patekohara
4. Nandiyakhurd 18. Sadak Chirchari
5. Damabanjari 19. Chando
6. Fafamar 20. Barbaspur
7. Kumarda 21. Achholi
8. Kesal 22. Halekosa
9. Ghotia 23. Badgaon
10. Umarwahi 24. Mahroom
11. Pathandhodgi 25. Pinkapar
12. Lammeta 26. Masulkasa
13. Kallubanjari 27. Gidrri
14. Nandiya (K) 28. Jondhra
79
ZP JP GP
1 2 3
Dhamtari (C) 1. Dhamtari 1. Bagtarai 11. Shankardah
2. Riwagahan 12. Kurmatarai
3. Gujra 13. Gangrel
4. Donar 14. Kalartarai
5. Gagra 15. Dhaurabhata
6. Parastarai 16. Chikhali
7. Bhothali 17. Dargahan
8. Aroud (L) 18. Arjuni
9. Mudpar 19. Semra (d)
10. Barari 20. Dodaki
2. Kurud 1. Korra 12. Chorbhatthi
2. Charota 13. Bagdehi
3. Kokdi 14. Gatapara
4. Gadadih (R) 15. Parkhanda
5. Navagaon (Thuha) 16. Kodebod
6. Sihad 17. Erra
7. Sirve 18. Kharra
8. Seldeep 19. Sirri
9. Goji 20. Jarwaydih
10. Kotgaon 21. Siloti
11. Pachpedi 22. Jugdehi
Notes: ZP = Zilla Panchayat, JP = Janpad Panchayat, and GP = Gram Panchayat
C = Comparator B = Backward
80
Annex 4
Rural Poverty Head Count Ratio
(In Percentage)
States 1973-74 1993-94 1999-00
(MRP)
2004-05
(MRP)
2004-05
(URP)
Madhya Pradesh 62.66 40.64 37.06 29.8 36.9
Chhattisgarh 31.2 40.8
Rajasthan 44.76 26.46 13.74 14.3 18.7
Orissa 67.28 49.72 48.01 39.8 46.8
All India 56.44 37.27 27.09 21.8 28.3
Source: Economic Survey, 2002, Ministry of Finance, Government of India; latest poverty
figures from Government of India, 2007.
Note: See notes to table 2.6
81
Annex 5
Indicators and Scoring Scheme used in 2002 BPL Census
Characteristic
Scores
0 1 2 3 4
Size group of
operational
holding of land
Nil Less than 1 ha
of un-irrigated
land (or less
than 0.5 ha of
irrigated land)
1 ha - 2 ha of
un-irrigated
land (or 0.5 -
1 ha of
irrigated land)
2 ha - 5 ha of un-
irrigated land (1.0-2.5
ha of irrigated land)
2.5 ha of irrigated land
Type of house Houseless Kutcha Semi-pucca Pucca Urban type
Average
availability of
normal wear
clothing (per
person in
prices)
Less than 2 2 or more, but
less than 4
4 or more, but
less than 6
6 or more, but less
than 10
10 or more
Food security Less than 1 square
meal per day for
major part of the
year
Normally, 1
square meal
per day, but
less than 1
square meal
occasionally
1 square meal
per day
throughout
the year
2 square meal per
day, with occasional
shortage
Enough food throughout
the year
Sanitation Open defecation Group latrine
with irregular
water supply
Group latrine
with regular
water supply
Clean group latrine
with regular water
supply and regular
sweeper
Private latrine
Ownership of
consumer
durables: Do
you own? -TV,
electric fan,
kitchen
appliances like
pressure
cooker, radio
etc.
Nil Any one Two items
only
Any three or all items All items and/or
ownership of any one of
the following: -
computer, telephone,
refrigerator, colour TV,
electric kitchen
appliances, expensive
furniture, LMV/LCV,
tractor, mechanized two
wheeler/three wheeler,
power tiller, combined
thresher/harvester (4
wheeled mechanized
vehicle)
Literacy status
of the highest
literate adult
Illiterate Upto primary
class (class V)
Completed
secondary
Graduate/professional
diploma
Post graduate/
professional graduate
Status of
household
labour force
Bonded labour Female and
child labour
Only adult
females and
no child
labour
Adult males only Others
Means of
livelihood
Casual labour Subsistence
cultivation
Artisan Salary Others
Status of
children (5-14
years) [any
child]
Not going to
school and
working@
Going to
school and
working @
Going to school and not
working @
82
Type of
indebtedness
For daily
consumption
purposes from
informal sources
For
production
purpose from
informal
sources
For other
purpose from
informal
sources
Borrowing only from
institutional Agencies
No indebtedness and
possess assets
Reason for
migration from
household
Casual work Seasonal
employment
Other forms
of livelihood
Non-migrant Other purposes
Preference of
assistance
Wage
employment/TPDS
(Targeted public
distribution
system)
Self
Employment
Training and
skill
upgradation
Housing Loan/subsidy more than
Rs one lakh or no
assistance needed
Source: Ministry of Rural Development, Government of India.
Note: The total score of a household will vary between 0 and 52.
@ Indicates non-formal education.
83
Annex 6
SFC Recommendations and Action Taken Reports
Areas Issues Recommendations Action Taken
First SFC
Additional
resource to
Panchayats*
1. Special grants
2. Incentive
grants to local
bodies
3. Establishment
grant
4. Lump sum
grants
1. Grants for special works done through the
three-tier Panchayati Raj institutions.
2.(a) 2.5 percent of expenditure on delegated
programmes to the Panchayats working as
agents of the state governments
(b) Incentives for raising own revenue
collection.
3. For 1995-96 Rs. 67.76 crore was
recommended. From the next year it will be
based on actual estimates.
4. A lump sum amount to be paid in the form
of grant-in-aid by state government at its
discretion for furnishing the offices and their
maintenance.
1. Accepted
2. (a) Accepted for
works that are
specially assigned
in addition to their
duties.
(b) Initially it was
accepted but
subsequently in
1997, the state
government decided
that it will be one of
the indicators of
best panchayat
award scheme.
3. Accepted
4. Not Accepted
Further
classification
of budget
heads
States resources The budget provisions of the three-tier
Panchayati Raj institutions under the Demand
Heads no: 80,82 and 84 should be further be
classified into
(a) State’s share of resources
(b) Grant-in-aid
(c) Agent
Accepted
Tenth
Finance
Commission
Recommenda
tions
Distribution of
TFC grant of Rs.
87.16 per year.
1. Rs. 43.28 crore to be distributed to village
panchayat as general purpose grant. The
remaining amount for Rural Development
Fund (RDF) to be utilized especially for
drinking water supply or by way of margin
money.
2. For management of RDF a separate agency
with an authorized capital of Rs. 500 crore
should be considered.
1. Not Accepted as
the TFC grants are
governed by their
recommendations.
2. Not Accepted
84
Annex 6 (contd.)
SFC Recommendations and Action Taken Reports
Areas Issues Recommendations Action Taken
Other 1. Forest revenue
2. Agricultural
produce mart
Mandi)
3. Data bank
4. Performance
budget
5.Annual District
Plan
6. Internal Audit
7. Monitoring
Cell
8. Tapping of
Additional
resources
1. The revenues from forests to be given to
panchayats within the geographical area.
2. Share of mandi revenue to be raised to a sum
of Rs. 50 to Rs. 60 crore.
3. Set up a data bank
4.Various departments of the government will
frame separate performance budget
5. For regulation at the district level an Annual
Plan of Operation to be formulated
6. Internal audit by the sample system and the
present system of audit to be strengthened to
ensure accountability
7. The SFC I secretariat should continue to
function after the expiry of the Commission to
update records relating to activities, reports and
other material, etc.
8.(a) Charging of fees from both buyers and
sellers of animals in organized markets
(b) to raise revenue by contracting quarries of
sand, gitti, and murrum
(c) tax on pacca houses
(d) Impose fees on well to do farmers on the
usage of modern implements
(e) Revise rates of land revenue and education
development tax
(f) Revise rates on irrigation
(g) Annual fees should be realised in
proportion to their electricity consumption
from small and tiny industries, like floor mill,
rice mill, brick klin, stone quarries etc.
1.Under
consideration
2.Under
consideration
3. Accepted and
will be set up in the
Directorate of
Economics and
Statistics
4.Accepted and to
implemented from
the financial year
1998-99
5. Accepted
6. Accepted
7. The existing cell
in the Finance
department would
be entrusted with
this work.
Note- * Additional to tax devolution as given in table
85
Annex 6 (contd.)
SFC Recommendations and Action Taken Reports
Areas Issues Recommendations ATR
Second SFC
Additional
resources to
Panchayats*
1. General purpose
grants
2.Establishment
grant
3. Specific grant
4.Devolution of
net proceeds
1.General purpose grant of Rs.
50 crore for village panchayat
2. A grant (specific grant) of
Rs.28.40 to PRIs for the
payment of honorarium and
other payments to the staff
working in the 3-tier PRIs,
with a provision of 10%
increase in the amount of grant
every year may be given.
3. Rs.5 crore to the Zilla
Panchayats for organizing
training programmes for
elected representatives.
4. The Commission has also
recommended the devolution
of net proceeds of land
revenue, surcharge on stamp
duty and cess on sales tax in
the form of assigned tax
revenue which is in existence
may be allowed to continue.
1. Not accepted
2. Accepted at 5%
increase every year.
3. Accepted
4. Accepted.
86
Annex 6 (contd.)
SFC Recommendations and Action Taken Reports
Recommendations of the Commission Decisions of the Ministerial
Council
Additional Decisions by Council of Ministers on the Second
Finance Commission
10 % of divisible pool for back districts having 10% or more rural
SC/ST population
Distribution should be done on the basis of percentage of rural
SC/ST population in that district to total rural SC/ST population in
these backward districts.
And further, for distribution of this amount within a village
panchayats in that district, should be done multiplying the rural
SC/St population of the village by that districts per capita share.
Rejected
General purpose grants (Rs 50 crore) to Gram Panchayats on the
basis of the number of compulsory (essential) and voluntary taxes
imposed by them.
Under consideration
General Purpose Grant to the Janpad Panchayats (14.65 crore) and
Zilla Panchayats (2 crore) on the basis of their respective
population.
Under consideration:
Establishment Grant: A grant (special grant) of Rs.28.40 crore to
PRIs for the payment of honorarium and other payments to the
staff working in the 3-tier PRIs, with a provision of 10% increase
in the amount of grant every year.
5% increment every year
based on prevailing inflation
rate should be accepted.
Special grant of Rs. 5.00 crore to Zilla Panchayat for organising
training of elected representatives at the district level.
Worth accepting
the Commission has recommended devolution of tax revenue
(including Rs. 48.21 crore as land revenue, Rs. 22.28 crore as
surcharge on stamp duties and Rs. 6.92 crore as cess on sales tax)
Worth accepting
Source: Ministry of Finance, Government of Madhya Pradesh, Bhopal
87
Annex 7
Functional Devolution in Chhattisgarh by Different Departments
Scheduled Tribe and Scheduled Caste Welfare Department
Activity of State
Sector
Activities of Panchayat Sector
Department, State and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat
Janpad
Panchayat
Gram
Panchayat Assessment of students' education level.
Preparation of annual education calendar
Approval of new subjects in schools.
All divisional and state level extra-curricular activities.
Educational Statistics:
Compilation and all works pertaining to Assembly.
Responsibility of training teachers and employees,
institution of teachers training like DITE, BTI and
control over its staff.
Supervising and monitoring of the implementation of
Central and Centrally Sponsored Schemes.
As per the state government policy the District Standing
Committee will be responsible for opening of new
schools, construction of buildings or implementation of
the decisions of state government, etc.
Creation of new posts in schools or offices.
Management and and functioning of schools.
Functioning of schools.
Arrangement of school
buildings.
Holidays and period of
study in schools.
Purchase of education
material.
Distribution of free books,
and Book Bank Scheme.
Distribution of school
uniform free of cost.
Mid-day meals programme.
BTI Operation Black Board
Scheme.
1.Transfers of Staff
Assistant (Education) Accountant - I No.
UDC - I No.
LDC - 2 Nos.
Peons - 2 Nos.
All Development Block Education Officers in tribal
Development Blocks and all staff in their offices
Schools running under Karahal Development Block
of Muraina district, Development Block Education
Officer and complete staff of office has been
transferred to administrative control of district
panchayat.
2. Educational Staff: Education workshops will be
conducted and they will be controlled by district
panchayats. The appointment powers for education
staff (category-I and II) in schools is given to Zilla
panchayats and the appointment powers for category-
III is given to Janpad panchayats.
3. Control over Staff:
All administrative powers pertaining to the staff'
engaged in schools transferred to Zilla panchayats
situated in rural areas will be with Zilla Janpad
panchayats only.
4. Transfer: The transfer of staff within their jurisdiction will be
done as per prescribed policy of Zilla panchayat.
Allocations to
district/Janpad
panchayat for
honorarium of
education staff and
internal activities.
88
Agriculture Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Examination of seed,
fertiliser, pesticides
and soil, and other
laboratories
All agricultural area
All nurseries
Maali Training
Centres
Training centres and
other institutions
All agriculture
engineering
All legal powers to
state government
Agriculture
University
All agriculture
produce markets
All schemes assisted
by international
agencies
implemented by
state departments.
Propagation of methods to increase
agricultural production, including the methods
of advanced agriculture.
Organization of agriculture fairs and
exhibitions.
Administrative control over Agriculture
Extension Programme and its related staff.
Management and control of agricultural
quality inputs like fertilizers, seeds, pesticides.
Approval of all schemes and beneficiaries.
All crop campaigns Implementation of organic
farming, bio-gas and compost programmes
and training of farmers and skilled workers.
Development of fallow land and barren land
and intensive farming.
Sanction of grant.
Construction, maintenance, supervision and
management of minor irrigation schemes
costing up to Rs. 10 lakh.
Organization of training and conducting study
tours of farmers.
Monitoring of the implementation of Crop
Insurance Scheme.
Construction of godowns, cold storages,
infrastructure for storage of agricultural
produce.
Review and monitoring of physical and
financial targets of schemes.
Promoting and development of
agriculture.
Control over staff engaged in the
extension of improved techniques of
farming.
Estimating the demand for
agricultural inputs for the kharif and
rabi campaigns.
Publicity and training for the
promotion of organic agriculture and
application of compost as well as
bio-gas.
Distribution and quality control of
chemical fertilizers, seeds, and
organic manure, pesticides, bio-
fertilisers and improved agricultural
implements.
Construction of godowns for crops,
fertilisers and seeds under rural
development programmes.
Control of demonstration on the
fields of selected farmers and
distribution of mini-kits.
Construction, maintenance and
management of micro-minor
irrigation work costing up to Rs.5
lakh.
Selection of beneficiaries under
various government schemes and
submitting their panel to the Zilla
panchayat.
Development and promotion
of agriculture.
Development of intensive
farming.
Framing rabi & kharif
programmes and preparing
the estimates of agricultural
inputs.
Development of barren and
fallow land.
Implementation and
management of programmes
of agricultural demonstration
of mini-kit distribution.
Management of crop-cutting
experiments under the Crop
Insurance Scheme.
Monitoring the quality of
improved seeds, agricultural
implements, pesticides, and
chemical fertilizers sold
within its jurisdiction.
Maintenance of transferred
assets.
Control over
Deputy Director,
Agriculture and its
subordinate staff
engaged in
extension and land
conservation,
agriculture and
horticulture areas,
forestry.
Control of Zilla
panchayat over
subordinate staff of
schemes and
Assistant Director
Horticulture at
district-level under
the Directorate.
Orders for the
utilisation of
allocated
schemes as per
the
recommendation
or decision of
the panchayat
by the Divisional
Officer.
89
Department of Horticulture
Activity of State
Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat
Gram
Panchayat Establishment of horticultural gardens
and promotion to promote the same.
Horticulture area extension.
Establishment and arrangements for its
nurseries and propagation and control
over concerned staff.
Conduct of horticulture fairs and melas.
Farmers training and trekking.
Approval of schemes and beneficiaries.
Mutual provision and quality control.
Sanction of grant.
Review of physical and financial
shortfalls and rationalisation of review
schemes
Development and promotion of horticulture.
Establishment of nurseries and their
maintenance.
Preparation and implementation of
programmes of improved cultivation of
fruits, flowers, spices and vegetables.
Training of farmers and extension activities.
Production, distribution and quality control
and plants of seeds.
Maintenance of transferred assets.
Demonstration, distribution, and supply of
mini-kits under various schemes and
inspection of ongoing programmes.
Selection of beneficiaries under various
government schemes and its submission to
Zilla panchayat.
Development of horticulture.
Preparation of nurseries for the
development of horticulture in
panchayat areas.
Administration, demonstration
distribution of mini-kits.
Maintenance of transferred assets.
90
Rural Development Department
Activity of State
Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Policy making,
training, coordination
between Govt. of
India and various
departments of sate
government.
District-wise targets
in various
programmes and all
assigned work except
the works assigned to
panchayats.
Jawahar Rozgar Yoiana:
Determining the priority and
utilisation of 15 percent of the
amount made available under the
scheme.
Employment Assurance Scheme:
Determining priorities and
utilisation of 40% of the total
amount made available under the
Scheme.
Jeevan Dhara Yoiana:
To fix the targets Janpad
Panchayat-wise.
Indira Awaas Yoiana: To fix the
targets Janpad Panchayat-wise.
Integrated Development
Programme: Supervision of lRDP.
To fix targets for Janpad
panchayats.
Supervision of TRYSEM Scheme.
Supervision of distribution of
improved tool-kits programme.
Powers of administrative sanction
for works upto Rs. 10 lakh.
Utilisation of 15 percent of the
amount made available under the JRY
as per their own discretion according
to their priorities.
Utilisation of 30 percent of the
amount made available under the EAS
as per their own discretion and
according to their own priorities.
To fix the targets gram panchayat-
wise for Jeevan Dhara Yojana
Scheme.
To fix gram panchayat-wise targets
under lAY.
Under IRDP, to prepare the
beneficiaries.
To fix targets panchayat-wise
implementation of IRDP.
Implementation of TRYSEM Scheme.
Implementation programme for the
distribution Tool-kits.
According sanction for works upto
Rs. 10 lakh.
Power to spend 70 percent of the
amount available under the JRY as
per their own priority.
Selecting beneficiaries for EAS
with the approval of Gram Sabha.
Selection of beneficiaries for the
Jeevan Dhara Scheme with the
approval of Gram Sabha.
Selection of beneficiaries for lAY
with the approval of Gram Sabha.
Selection of beneficiaries of the
IRDP with the approval cases of
Gram Sabha.
Selection of beneficiaries for
TRYSEM with the approval of
Gram Sabha.
Sanction of works upto a value of
Rs.3 lakh.
District-level officer
including the complete
staff in district
development wing will
be under the Zilla
panchayat.
Absorption of DRDA
with staff in Zilla
panchayat.
Absorption of BDO at
block level in Janpad
panchayat.
Asst. Development
Extension Officer,
Department Extension
Officer, Development
Block Officer will be
under the Janpad
panchayat.
Village Assistant will be
under the gram
panchayat.
Contribution of
Govt. of India
and state govern-
ment.
90 percent by
Central govern-
ment and 10
percent by
beneficiaries.
91
Finance Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat All the activities except the
activities entrusted to the
panchayat sector.
Holding from time to time meetings
of District Advisory Committee with
the help of Lead Bank of the District.
Securing maximum cooperation of all
commercial, rural and cooperative
banks for the development of rural
areas of the district.
Conducting Meetings of 'Block-
level Coordination Committee' of
branch managers of all commercial
banks located in the Development
Block.
Promotion of Small Savings
Scheme and appointment of
Small Savings Agents.
92
School Education Department
Activity of State
Sector
Activities of Panchayat Sector
Department, State and
Panchayat Transferred to Budget Arrangement Zilla Panchayat
Janpad
Panchayat
Gram
Panchayat Recognition of schools.
To prescribe the course and books.
Conducting of exams.
Assessment of educational status of the students.
Preparation of annual education calendar.
Permission to start new subjects in schools.
All departmental and state level course
activities.
New system in the existing activities in schools.
Collection of educational statistics, and all
related works.
Supervision and monitoring of implementation
of central and Centrally-sponsored programmes.
Responsibility of training of teachers and staff,
number of training of teachers like DIET, BTI,
etc.
Right of taking decisions regarding opening of
new schools and building construction from
amount reviewed from state government or
extension, etc. District Planning Committee will
be totally incharge of above activities as per the
policy shown by the state government.
Management and
administration of
schools.
Management of school
Building, etc.
Determination of
duration of study and
vacation in schools.
Purchase of teaching
material.
Distribution of free
text books and Book-
Bank Scheme.
Free Uniforms.
Non-formal education
Programme.
Mid-day Programme.
Operation Black-Board
Scheme.
Distribution of
Scholarships
Stipends.
Inspection of all the
schools within the
panchayat areas.
Conducting literacy
campaigns.
Construction and
extension of primary
school buildings.
Distribution of school
uniforms to the
students.
Book-Bank Scheme.
Running of non-formal
education
programmes.
Total literacy drive.
Establishment,
management and
running of primary,
middle and high
schools.
Collection and
distribution of text
books and other
educational material.
Construction and
maintenance of
school buildings upto
Rs.5 lakh.
Distribution of
scholarships.
Book-Bank Scheme.
Appointment of
supervisors and
instructors.
Transfer of Staff:
One Dy. Director, Accounts Officer,
Planning Officer, Steno, Sr. Auditor,
Typist, Assistant, Peon, Driver, two
posts of LOC. One Block
Development Education Officer,
Head Clerk, Assistant, UDC, LDC,
Accounts Officer, Typist and two
posts of Peon.
Education Staff:
School education staff is meant for
teaching only and they will be
controlled by Zilla panchayats.
For control over staff:
(a) Zilla Panchayat will have all the
administrative powers of the
appointing authority regarding the
staff in schools situated in rural areas
and transferred Zilla panchayats.
Deputy Director will implement the
educational decisions according to
the rules.
(b) Zilla panchayat will have all the
administrative powers regarding the
staff appointed or will be appointed
"by Zilla panchayat in future.
Provision of allocation of
Zilla/Janpad panchayat for
honorarium to the education
staff and internal activities.
93
Social Service Department
Activity of State
Sector
Activities of Panchayat Sector Department, State and
Panchayat Transferred
to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Governmental Social Security
Institutions and Handicap
Welfare Institutions,
responsibilities related with
Probation of Offenders Act.
Dissemination of activities of
the Department
Holding of camps for the
distribution of artificial body
equipment to the handicapped. Survey for
identification of the
handicapped.
Running of homes for the old.
Prohibition Intoxication.
Eradication of beggary.
Supervision of rural libraries and
reading rooms.
Sanction of grants to voluntary
organization upto specified limit.
Inspection of government and
non-governmental institutions.
Social Security Pension,
National Old Age
Pension.
National Family
Assistance Scheme.
Supervision of rural
libraries and reading
rooms.
Scholarships to the
disabled.
Running of village libraries and
reading rooms.
Selection of beneficiaries and
payment of grants.
Dy. Director, Panchayat and
Social Welfare, Additional
Chief Executive Officer, Zilla
Panchayat.
Dy. Director, Panchayat and
Social Welfare and Class III
and IV Staff of Social Welfare
Department working under him
transferred to the Zilla
panchayats.
Panchayat and Social Welfare
Organizer working under
janpad panchayat.
Budget transferred to
the district panchayat
for implementation of
schemes.
94
Labour Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat All activities except the
activities which are
entrusted to the
panchayat sector.
Zilla panchayat is appointed as
Inspector within its jurisdiction
under Child Labour (Eradication and
Exchange) Act, 1986.
Accepting applications under Indira
Krishi Shramik Durghatana Yojana.
The Janpad panchayats are appointed
as Inspector under the Child Labour
(Prevention and Regulation) Act,
1986.
Forwarding applications received
from gram panchayats under the
Indira Krishi Shramik Durghatana
Yojana to the Zilla Panchayats.
Disbursement of amounts after
sanctioned by Zilla panchayat under
the Indira Krishi Shramik Durghatana
Yojana.
Under the Minimum Wage Act, 1948 all
gram panchayats are appointed as
inspectors regarding following:
Employment in tobacco factory including
beedi manufacture.
Employment in construction and
maintenance of roads and buildings.
Employment furnaces.
Employment in cement tiles-making except
Mangalore tiles, Allahabad tiles or other
tiles.
Employment in stone breaking or stone-
crushing.
Under the Equal Wages Act, 1976 gram
panchayat have been appointed as
Inspectors for filing claims in cases of
payment of unequal wages before the
competent authority.
All village panchayats have been appointed
as Inspectors under the Child Labour Act
(Prevention and Regulation) Act, 1986.
Accepting the application form under the
Indira Krishi Shramik Durghatana Yojana.
95
Rural Electrification and Energy Including Non-Conventional Energy
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat All activities except the
activities which are
entrusted to panchayat
sector.
Planning, allocation, implementation,
supervision and control of Integrated
Rural Energy Programme.
Sanctioning of grants on energy-saving.
Development and encouragement of
non-conventional energy sources.
Formulating schemes relating to energy
policy and co-ordination with the
Electricity Board and Energy
Development Corporation.
Encouragement and development of
non-conventional energy sources.
Formulating and implementing block-
level scheme of energy.
Co-ordination for energisation with
Electricity Board.
Providing lighting on public
streets and other places and
their maintenance.
Encouragement and
development of schemes of
non-conventional energy.
Maintenance of community
non-conventional energy
sources and bio-gas plants.
Promotion and publicity of
improved Chula and means of
energy saving.
Survey of single-point light
connection and coordination
with Electricity Board for their
installation.
20-Point Programme Implementation Department
Activity of State
Sector
Activities of Panchayat Sector Department, State and
Panchayat Transferred
to
Budget
Arrangement Zilla Panchayat Janpad Panchayat
Gram
Panchayat All activities except the
Activities which are
Entrusted to panchayat
sector.
Implementation, monitoring and
reporting on 20-point programme.
Carrying out the directions, compliance
of Instructions given from time to time
by the state government for
development programmes
Implementation, monitoring and
reporting of the 20-point
programme. Carrying out the
directions given from time to time
the development and progress by
the state government.
Clerical Staff appointed at
district level for 20-point
programme.
Implementation will be under
Zilla panchayat
96
Forest Department
Activity of State
Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to Budget Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Except the activities
which are entrusted to
panchayat sector.
Encouraging farm forestry and
social forestry.
Encouraging and inculcating
competition among farmers
and institutions for forestry.
Promotion of farm forestry
and social forestry. Encouraging farm forestry and
social forestry. Issuing of transport
permits for various kinds of trees as
determined by the state government
from time to time.
Budget for plan grant will be
given to Zilla panchayat. Zilla
panchayat distributes the above
amount to the Janpad panchayats,
where necessary.
Public Health and Engineering Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to Budget Arrangement Zilla Panchayat
Janpad
Panchayat Gram Panchayat Selection of new bore wells, mines.
Construction of Piped Water Supply
Schemes.
Concept of hand-pump water
schemes.
Village Sanitation
Programme. Responsibility of running Piped
Water Supply Schemes in rural
areas.
Grant for Piped Water Supply
Schemes under non-plan Demand
Nos.80 and 82.
97
Public Health and Family Welfare Department
Activity of State
Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to Budget Arrangement Zilla Panchayat Janpad Panchayat
Gram
Panchayat Management andadministration of
dstrict hospitals, civil hospitals,
dispensaries situated in urban areas
and special hospitals.
Purchase of equipment and
construction of new buildings.
Contracts of fixing the norms for
purchase of medicines and other
items will be done by State-level
Purchase Committee.
Management and administration of
Community Welfare Centres,
Primary Health Centres and
Subsidiary Health Centres.
Prevention of diseases in the
district.
Responsibility for the National
Health Programmes.
Maintenance and upkeep of
buildings and equipment of
institutions entrusted to the
panchayats.
Purchase of medicines on rate
contract entered into by the State
Committee.
Responsibility of monitoring the
activities of Primary Health
Centres and Sub-Health Centres
situated at Janpad/Gram
Panchayats entrusted by Zilla
panchayat.
District Chief Medical
Officer and his staff will
be under the Zilla
panchayat.
One clerk at Janpad
Panchayat level.
Budget for purchase of
medicines will be transferred
to Zilla panchayats by the
District Chief Medical Officer.
Budget for maintenance of
buildings will be given to the
panchayats.
98
Revenue Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat
Janpad
Panchayat Gram Panchayat Except the activities
which are entrusted to
panchayat sector.
Supervision of Free
Bonded Labour Act.
Management of public
tanks (section 251) Undisputed mutation (Section 110)
Supervision of village boundary and survey marks (Section 128).
Specifying boundary and survey marks and imposition of
punishment for removing or damaging them (Section 130).
Where there is no provision for Patel, the Sarpanch and Secretary
will jointly discharge the duties of Patel.
(Section 142), and all powers of gram panchayats (Sections 222-
229).
Recommendation for appointment of Kotwaar (Sections 230-
231).
Management of public ponds (Section 251).
Distribution of Loan Books.
Making available for perusal by villagers and farmers, the
Patwari records, specially panchshala khasra, record of rights, B-
1, Nister Patrak, Wajibul Arz, etc.
Allotment of house sites according to rules and norms to the
houseless farmers, farm workers in accordance with the priorities
fixed by the government and disposal of abadi according to rules
(Section 234).
Distribution of undisputed holdings (Section 178).
99
Department of Fisheries
Activity of State
Sector
Activities of Panchayat Sector
Department, State and
Panchayat Transferred to Budget Arrangement Zilla Panchayat
Janpad
Panchayat Gram Panchayat Research work
Training of staff
All activities related to
fish seed production.
Administration and
Management of Fisheries
and Fisheries Science
Centre.
Implementation of
Central Area and
Centrally-sponsored
programmes receiving
aid from Govt. of India
(except Fish Farmer
Development Agency).
Development and management of water
resources giving the pattas of fish development
in ponds with an average area of more than
100 hectares to 200 hectare.
Sanction of loans grants to Fishery
Cooperative Societies as per rules.
Granting financial assistance of Rs.50001 for
the first three years to the fishery development
SCs and STs.
Development of fisheries in irrigation tanks.
Training of fishermen.
Making loans and grants to registered co-
operative societies of fishermen for fishery
including lease of tank, for purchase of fish
seed, fishing equipment, etc.
Giving grant-in-aid upto Rs.25,0001- to
Fishery Co-operative Society of Fishermen
belonging to the STs and SCs for the first three
years for share capital, lease of tank, purchase
of fish seed and nets.
Powers of supervision of schemes and according
administrative approval.
Implementation of all programmes taken up by
the Rajiv Gandhi Fishery Development Mission.
Granting leases for
pisciculture in tanks
with average water
spread ranging from
10 to 100 hectare.
Selection of
beneficiaries of
beneficiary-oriented
schemes and
forwarding the panel
to Zilla panchayat.
Granting of lease for
fisheries in tanks with
average water spread of
upto 10 hectares.
Selection of beneficiaries
for beneficiary-oriented
schemes and forwarding
their panel to Janpad
panchayat.
Asst. Director, employees of
Fisheries Depts. under the control of
District Panchayat.
Chairman of Fisheries Farmer
Development Agency will be Chief
Executive Officer of Zilla
Panchayat.
All staff will work under the control
and direction of Zilla panchayat
service conditions of transferred
staff, payment of salaries and
allowances, promotion and
disciplinary action will remain
unchanged. But staff transferred to
Zilla panchayat will be accountable
to Zilla panchayat only.
Confidential reports of transferred
employees will be sent through
Chief Executive Officer of District
Panchayat.
Complete rights of transferring the
employees of 'C' and 'D' group
within the district.
Under the control and
direction of ZP, withdrawal
of amount for
implementation of
programmes and projects
transferred to panchayats by
Asst. Director, Fishing
Industry, Chief Executive
Officer, Fisheries and
Farmer Development
Agency.
For programmes/projects
transferred, the amount
related to these programmes
will be transferred to budget
Head Nos.8l, 82, 84.
100
Women and Child Development Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Branch Institute related to
welfare of women and
children being run by the
department.
Aayashmati Yojana
Watsalya Yojana
Running of Integrated Child
Development Service
Project.
Providing family environment to
orphaned children. Crèches for
children.
Mobile crèches
Village Balwadis
Awareness Campaign. DWCRA
Scheme
Guidance and Study Tours
Eradication of Prostitution
Mahila Samridhi Yojana
Indira Mahila Yojana
Dattak Putri Yojana.
Powers to appoint Anganwadi
workers and Assistants.
Making arrangements locally
for nutrition programmes.
Selection of villages for
establishing Anganwadi.
Construction of buildings.
Implementation of National
Maternity Scheme.
Assistant
Anganwadi worker.
Integrated Women
and Child Extension
Officer.
Powers of
appointing
Supervisor is with
District/ Janpad
Panchayat.
Allocation to
panchayats for mobile
crèches, women
awareness campaigns,
nutrition food
programme in tribal
areas, Cradle House
Institute engaged in
child welfare areas and
facility of family
environment scheme to
the orphans.
Manpower Planning Department
Activity of State Sector
Activities of Panchayat Sector
Department, State and
Panchayat Transferred to Budget Arrangement
Zilla
Panchayat
Janpad
Panchayat Gram Panchayat Except the Schemes entrusted to
panchayat sector all other remaining
schemes.
Distribution of
Unemployment
Allowance.
Department Staff and Panchayat in which
it is transferred. Budget arrangement by
departments for transferred
schemes.
101
Animal Husbandry Department
Activity of State Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat State Veterinary Hospital
Divisional Veterinary Hospitals
District Veterinary Hospitals
Mobile Veterinary Hospitals
All Disease Research Laboratories
Prevention of chicken –pox, epidemic
scheme, and its units and staff
Asst. Veterinary officer, training Centre
Artificial Insemination Training Centre
Poultry Training Centre
Poultry Project/ Poultry livestock/
hatcheries
Central Semen Laboratory
Institute of Animal Health and Biological
production
Liquid Nitrogen Machine
Muhkhuri, Broad Unit
Animal Disease Survey Scheme
Poultry Research Area
All types of animal breeding/poultry/
piggery/goat/duck/area
Projects receiving foreign-aid
Centrally-sponsored Schemes
Co-ordination with Veterinary Council
Establishment administration
and maintenance of veterinary
hospitals.
Establishment, maintenance
and management of mobile
veterinary dispensaries.
Improvement of the breed of
bovine, poultry and livestock.
Promotion of dairy, poultry
and piggery development.
Prevention of epidemic and
infectious disease.
Evergreen Fodder Project.
Administration and maintenance of
veterinary dispensaries and animal
husbandry services.
Breed development poultry and
livestock.
Prevention and control of epidemics
and contagious diseases among
livestock and poultry.
Establishment and maintenance of
veterinary hospitals and
dispensaries, primary treatment
centres/rural veterinary dispensaries.
Livestock breeding
Programmes.
Co-operation in the control of
epidemic and infectious diseases.
Provision and Management of
fodder as required.
Development programmes of
poultry and livestock.
Engagement to diary and
development of poultry and
piggery.
Development of grazing lands
and its maintenance and
prevention of encroachments
and misuse of grazing land.
Co-operation in the control of
epidemic and contagious
diseases.
Asst. Veterinary
Surgeon.
Asst. Veterinary
Area Officer.
Animal Attendant.
Shepherd.
Safaiwala
Vaccinator
Ox Guard
Driver.
Provision is made.
102
Department of Medical Education
Activity of State Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat
Janpad
Panchayat
Gram
Panchayat Drawing and disbursement of
salaries of the staff working in
dispensaries under the Zilla
panchayat will be done by
Divisional Ayurved Officer/Zilla
Ayurved Officer.
Management and functions of
district-level urban dispensaries.
Disciplinary action against
Group 'A' and Group 'B' officers.
Except the transferred 2079 rural
dispensaries, administrative
control over Zilla level/urban
dispensaries.
To open new dispensaries.
Divisional Ayurved Officer/
District Ayurved Officer and
Panchayat sector will be held
responsible for duties, fun-
ctioning, supervision of staff,
monitoring, guidance and
technical support.
Establishment, Administration and Management of 2079 dispensaries located in rural areas.
Administrative control over class 'C' and 'D' employees of the
dispensaries situated in rural areas.9
Construction, repair and maintenance of dispensary buildings located in
rural areas.
Payment of rent of dispensary buildings located in rented premises in
rural areas.
Disciplinary action against class 'C' and 'D' employees of the
dispensaries located in rural areas.
Development of Health Services, etc.:
Manufacture of guand of local level for dispensaries located in rural
areas.
Production of Forest Medicines.
Monitoring of the health education programmes of school-going children
in rural areas, and prevention and remedies for plague.
Promotion of drinking water and electricity in the dispensaries in rural
areas.Except on the days of weekly market declaration of holiday for
dispensaries situated in rural areas.
Supervision of arrangements for the control and treatment of rabid dog
bite, snake bites and scorpion bites in rural areas.
Group 'C' and 'D' staff of
transferred dispensaries
will be under the Zilla
panchayat. Direct recruitment of vacant
posts for group 'C' and
'D' staff located in rural
areas.
Unmarked.
103
Department of Medical Education (Contd.)
Activity of State Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat
Janpad
Panchayat
Gram
Panchayat Implementation and full participation in immunization programmes
conducted in rural areas.
Constitution of Public Health Development committees in rural areas.
Control and supervision of work, attendance, inspection of dispensaries
in rural areas.
Publicity and extension of pancha karm therapy, naturopathy, spread of
yoga in rural areas.
Participation in National Health Programmes in rural areas.
To ensure health services during fairs and festivals in rural areas.
Provision of life-saving drugs in the dispensaries located in
rural areas.
104
Department of Village Industries
` Activity of State
Sector
Activities of Panchayat Sector Department, State and
Panchayat Transferred
to
Budget
Arrangement Zilla Panchayat
Janpad
Panchayat Gram Panchayat Different types of rural
industries: Handloom, Silk,
Leather development,
Handicrafts and techniques
related to khadi.
Marketing and technical
assistance to rural industries
and units at Zilla level.
Responsibility for planning and all-round
development of village industries in the district.
Responsibility of preparing annual action plan,
exploring and assessment of the scope of development
of traditional and nontraditional village industries.
Arrangement for financial assistance to village
industries through various financial institutions.
Provision of forward and backward linkages for
village industries by establishing coordination with
various technical institutions like Directorate of
Sericulture, Directorate of Handlooms, Khadi and
Village Industries Board. Handicrafts Development
Corporation, Development Corporation, etc.
Implementation of Kalpavruksha Scheme and other
individual oriented schemes of development of village
industries in the district.
Establishment of village industry units under the self-
employment schemes of IRDP, Pradhan Mantri
Rozgar Yojana.
Responsibility for
effective planning and
development of block-
wise and micro-water
shed-wise village
industries.
District Rural Industry Officer,
and his clerk will be under Zilla
panchayat, and Rural Industry
Extension Officer will be under
the Janpad panchayat.
105
Mining Department
Activity of State
Sector
Activities of Panchayat Sector Department,
State and
Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat Discovery of Minerals According sanction for
extraction of minor minerals of
a value of over Rs.5.00 lakh.
(ordinary stone, sand, murram
and earth).
Recovery of Royalty.
Monitoring of illegal extraction/
transport of minor minerals.
According sanction for lease of minor
minerals costing over Rs.2.50 lakh to
5.00 Lakh (ordinary stone, sand,
murram and earth).
Recovery of Royalty.
Monitoring of illicit extraction/
transport of minor minerals.
Power to sanction leases for minor minerals
costing upto Rs.2.50 lakh (ordinary stone,
sand, 2murram and earth).
Recovery of Royalty.
Control of illicit minerals/ transport of
minor minerals.
Food and Civil Supply Consumption Department
Activity of State Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat All other works except the activities
entrusted to gram panchayats. Preparation and distribution of ration
cards and maintenance of related
records.
106
Directorate of Sports and Youth Welfare
Activity of State
Sector
Activities of Panchayat Sector Department, State
and Panchayat
Transferred to
Budget
Arrangement Zilla Panchayat Janpad Panchayat Gram Panchayat To participate in Regional and
State level sports competition
and All India Sports
competition.
To participate in Regional and
State level women Sports
Competition and AII- India
level Sports competition.
Conduct of Regional and State
level Khel Pratibha Khoj.
To coordinate the Regional and
State Training Centres.
All other departmental activities
belongs to State sector
To conduct district level sports
and games, competitions, and
to nominate in Regional
competitions.
To conduct block-level sports
and games, competitions for
women and participation in
district-level competitions.
To nominate to district-level
Khel Pratiba Khoj competition
and Regional competitions.
To co-ordinate district-level
training centres.
To conduct block-level sports
and games, competitions and
participation in district-level
competitions.
To prepare maps and blue
prints for formation of
ground in gram panchayat
and to submit the proposal
for an amount of 50 percent
grant.
The following staff of
district Level is attached to
district panchayat.
Junior Sport Organiser–1.
Assistant Grade three–1
Attendant - I.
The total budget at
district-level is
allocated to dist.
Police
Superintendent to
make
arrangements for
distribution of
amount to the
concerned
panchayat by
Police
Superintendent.
107
Annex 8 Fund flows to PRIs through Eight Centrally
Sponsored Schemes: Chhattisgarh and All India
(Rs. Crore)
Chhattisgarh All India
Sampoorna Grameen Rozgar Yojana (SGRY)
2004-05 129.32 4490.77
(0.34) (0.14)
2005-06 142.49 4391.24
(0.37) (0.11)
Swarnjayanti Gram Swarozgar Yojana (SGSY)#
2004-05 26.76 898.73
(0.07) (0.03)
2005-06 19.48 710.12
(0.05) (0.02)
National Food For Work Programme (NFFWP)
2004-05 104.10 2019.45
(0.27) (0.06)
2005-06 231.81 2158.28
(0.60) (0.06)
National Rural Employment Guarantee Scheme
(NREGS)*
2004-05 0.00 1.00
(0.00) (0.00)
2005-06 7.85 2292.57
(0.02) (0.06)
Indira Awaas Yojana (IAY)
2004-05 31.36 2878.25
(0.08) (0.09)
2005-06 44.74 2737.64
(0.12) (0.07)
108
Annex 8 (contd.)
Fund flows to PRIs in through Eight Centrally
Sponsored Schemes: Chhattisgarh and All India
(Rs. Crore)
Chhattisgarh All India
Integrated Waste Land Development Programme
(IWDP)
2004-05 17.24 334.42
(0.04) (0.01)
2005-06 14.44 381.40
(0.04) (0.01)
Drought Prone Areas Programme (DPAP)
2004-05 17.94 300.18
(0.05) (0.01)
2005-06 16.75 310.93
(0.04) (0.01)
Desert Development Programme (DPP)
2004-05 0.00 215.19
(0.00) (0.01)
2005-06 0.00 230.55
(0.00) (0.01)
Total (Eight Schemes)
2004-05 326.72 11136.99
(0.85) (0.36)
2005-06 477.56 13212.74
(1.24) (0.34)
Source: Annual Report, various years, Ministry of Rural
Development, Government of India. GSDP as released by CSO on 21.07.2006
Notes: # SGSY- 2005-06 central releases are as on 5.01.2006.
* Funds released for preparation of NREGA from 2nd
February to
March 2006. The total amount released for all the states was
Rs. 2292.57 crore.
Figures in parenthesis refer to percent to GSDP.
109
Annex 9
Frequency Distribution of ZPs, JPs and GPs in Chhattisgarh by Number and Type of Central Schemes Received
No. of Schemes Comparator
Cumula
tive %age
Central schemes
ARWSP CRSP DPAP IAY NFFWP NREGA MP Funds
Pension
Scheme PMGSY RSVY SGRY SGSY Others Total
ZPs
5 1 1 1 1 1 1 100.00
Total 1 1 1 1 1 1
JPs
4 0 1 1 1 1 1 50.00
5 1 1 1 1 1 1 100.00
Total 1 2 2 2 2 2
GPs
1 0 0 0 0 1 0 1 2.38
2 0 0 0 3 3 0 3 9.52
3 22 3 0 25 25 0 25 69.05
4 12 10 1 12 12 1 12 97.62
5 1 1 0 1 1 1 1 100.00
6 0 0 0 0 0 0 0
Total 35 14 1 41 42 2 42
110
Annex 9 (contd.)
Frequency Distribution of ZPs, JPs and GPs in Chhattisgarh by Number and Type of Central Schemes Received
No. of Schemes Backward
Cumula
tive %age
Central schemes
ARWSP CRSP DPAP IAY NFFWP NREGA MP Funds
Pension
Scheme PMGSY RSVY SGRY SGSY Others Total
ZPs
7 2 2 2 2 2 2 2 100.00
Total 2 2 2 2 2 2 2
JPs
5 0 2 2 2 2 0 2 2 20.00
6 1 7 7 7 7 6 7 7 90.00
7 1 1 1 1 1 1 1 1 100.00
Total 2 10 10 10 10 7 10 10
GPs
2 6 0 0 0 3 0 9 0 9 5.66
3 101 3 0 0 98 0 101 0 101 69.18
4 43 35 1 0 42 7 43 1 43 96.23
5 4 4 0 2 4 1 4 1 4 98.74
6 2 2 1 1 2 1 2 1 2 100.00
Total 156 44 2 3 149 9 159 3 159
Source: Author’s calculations
